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What is stamp duty? Here are all the key facts

House Beautiful (UK) logo House Beautiful (UK) 08/10/2019 Liz Murphy
a group of people in front of a building: Stamp Duty land tax is paid every time a house over a certain amount is sold in England and Northern Ireland. A similar fee applies in Scotland and Wales. © tupungato - Getty Images Stamp Duty land tax is paid every time a house over a certain amount is sold in England and Northern Ireland. A similar fee applies in Scotland and Wales.

Stamp Duty is a tax that’s paid every time a house over a certain amount is sold in England and Northern Ireland. It’s paid by the buyer, and the amount depends on the price of the property bought.

In Scotland it’s replaced by the Land and Buildings Transaction Tax, while in Wales house buyers pay Land Transaction Tax.

Stamp Duty Land Tax (SDLT) has been blamed for slowing down the housing market because it can be expensive and difficult to understand, so here are the key facts.

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HOW MUCH IS IT?

Currently, Stamp Duty applies to homes sold for more than £125,000 – that’s known as the threshold – and the amount paid is a percentage of the house price which increases with the cost of the property.

Just as with income tax, percentages of 0, 2, 5, 10 and 12 are applied to different parts of the price, up to a maximum of 12 per cent. So for instance, a property selling for £500,000 will pay:

  • 0% on the first £125,000
  • 2% on the next £125,000
  • 5% on the remaining £250,000

WHO'S ELIGIBLE?

You pay the tax when you’re buying a freehold property as well as one with a new or existing lease. First time buyers, however, are eligible for a discount as long as the property they’re buying costs £500,000 or less. And if you’re buying a second property that’s not going to be your main home, you’ll be charged around 3 per cent over the normal stamp duty rates.

a large brick building: House with Sold Sign © DGLimages - Getty Images House with Sold Sign

If you’re buying under a shared ownership scheme, you may have to pay Stamp Duty. The amount will be based on the market value of the property and the size of the share you buy. You shouldn’t have to pay more if you go on to buy a bigger share, unless that share goes over 80%.

WHEN IS IT PAID?

Stamp Duty has to be paid within 14 days of completion of the sale. Usually your solicitor or conveyancing agent will pay it on your behalf and add it to their fees, but it’s worth checking that they have this in hand. And if you're carrying out your own conveyancing, then you’re entirely responsible for making the payment.

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