Anyone who is buying a property that costs more than £125,000 will have to pay Stamp Duty Land Tax (SDLT) in England, Northern Ireland and Wales.
It doesn’t matter whether your property is leasehold or freehold. The duty still applies although residential leasehold properties are charged differently to freeholds.
However, if you have never owned a property here in the UK or abroad, then you are classed as a first-time buyer. This means you don’t have to pay any stamp duty on the first £300,000. Therefore, if you buy a property under £300,000 you won’t pay stamp duty at all. If your purchase is over £300,00 and up to £500,000 (the limit for this relief) you’ll pay a percentage of the remaining amount.
For example, if the property you want to buy is worth £500,000 you’ll only pay stamp duty on £200,000 at 5% making a total payment of £10,000.
If you are a married couple who want to buy a property in joint names, then you both need to be first time buyers to get the stamp duty discount.
The only reasons stamp duty isn’t payable is if you are buying a property which is up to £125,000 or if you are transferring the Deeds of your property to another person because the property is being gifted or has been left to someone else in a Will.
You don’t pay any more stamp duty either if you are transferring your half of the property to a partner or spouse due to a separation or divorce.
Your solicitor will normally deal with the payment of stamp duty during the course of the property purchase. It needs to be paid within 30 days of your house or flat sale. Late payment will incur fines and interest.
If, after your first purchase you then buy a second property either as a second home or a buy-to let investment, you will have to pay 3% more on top of the current stamp duty rates. This applies to all properties over £40,000.
You’ll even have to pay this extra rate if you buy a second home intending to make it your main residence, but you’ve yet to sell your first property. In this case though, you can claim a refund for the extra 3% if you sell your first home within 3 years and you claim the refund within 3 months, or 12 months if you are filing a self-assessment tax return.
If you are unsure about stamp duty, your Estate Agent or your solicitor will be able to help you. Alternatively, you can print out this helpful guide
from the Gov.uk’s website.