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NewslettersA guide to SDLT stamp duty and land tax across the UK
To purchase a home in Northern Ireland or England, you must pay stamp duty land tax SDLT. There will be no need to pay the stamp duty and land tax if the property price is less than £250,000 (for transactions between 23 September 2022 and 31 March 2025, after that the NIL rate band will be reinstated to £125,000).
Nonetheless, if you buy a second or additional property, you will need to pay an extra 3% of the tax per the revised rate.
This article is your stamp duty tax guide to help you understand everything. You should be familiar with the regulations living in the UK.
What is stamp duty?
Stamp duty land tax (SDLT) refers to the tax you must pay when you purchase a property in England or Northern Ireland. You will need to pay this price only if it exceeds a certain amount.
You must pay stamp duty land tax on residential properties worth more than £250,000. If you qualify for the first-time buyer’s relief, you may not have to pay any stamp duty land tax for properties worth up to £425,000 (£300,000 prior to 23 September 2022 and after 31 March 2025). You can also use the HMRC stamp duty calculator.
You must pay 3% extra if you buy a second home. You can also have some stamp duty land tax relief on second property. Having a property accountant services can help you to know the complete process of getting relief.
How much is the stamp duty land tax?
You need to be familiar with how much the stamp duty land tax is to avoid any extra costs. According to the SDLT advice by stamp duty experts, there are different bands for stamp duty land tax. The tax will further be calculated regarding the property purchase price that falls in every brand.
You must pay the stamp duty land tax when purchasing your main property worth more than £250,000. If the price of the property is more than £250,000, the rate applied is on a sliding scale. For properties worth between £250,001 to £925,000, the stamp duty land tax rate is 5% above £250,000. For properties worth £925,001 to £1500,000, the stamp duty land tax rate is 10%. The tax rate would further increase depending on the property’s price.
Stamp duty relief for first-time buyers
If you are buying a property for the first time in England or Northern Ireland, there is a special relief and, in some cases, you don’t need to pay stamp duty land tax at all. This will be applicable for all the properties worth around £425,000. If the cost of the property is not more than £625,000, you will not have to pay any stamp duty tax on the first £425,000. On the remaining £200,000, you will need to pay the applicable tax rate of 5%.
If the property price is more than £625,000, you must pay the standard rates. According to the stamp duty tax advice, you won’t be qualifying for the stamp duty land tax first-time buyer’s relief.
Paying stamp duty
You must file the stamp duty land tax return and pay it within 14 days from the day of getting your new property or completion date. However, in most cases, you will need the help of a conveyancer or a solicitor. You can reach out to any professional stamp duty land tax advisor who will help you with the payment. If you do not have any solicitor or conveyancer, you may contact HMRC. As a result, you can make the payment accordingly.
If you cannot make the payment within 14 days from the date, the HMRC will be charging interest or late payment penalty fees. Furthermore, they will also accept different payment modes like online. You can also pay via your bank or cheque.
Repayment of higher rates for stamp duty
When you buy the new main property but have problems or delays in selling your older one, you need to pay the higher rates for stamp duty land taxes. This is mostly because now you will be owning two properties. Nonetheless, if you can sell your previous main home within three years of getting your new home, you will be eligible for SDLT stamp duty refunds for the higher rates you paid earlier when you bought your new home. You will have to claim stamp duty land tax back within 12 months of selling your old main residence. Furthermore, you can claim stamp duty land tax back within 12 months of filing the tax return date, whatever comes later. Click here for FAQs on applying for refund of additional 3% Stamp Duty Land Tax (SDLT) Surcharge.
When can you not pay stamp duty
There would be certain cases under which the stamp duty land tax may not be payable. These include:
- If no consideration or deemed consideration (like assumption of mortgage) is paid for the property.
- Property left within the terms of a Will that does not hold applicable for SDLT as there are no considerations for it. Moreover, you don’t need to inform HMRC in such a case either.
- Transferring the property under court order, especially during divorce or separation. If the couple is parting ways permanently without a legal court order, they will need to pay SDLT. They will be treated the same in the eyes of the law as unmarried couples.
- When gifting the home to someone else, you don’t need to pay the Stamp Duty Land Tax rates per the market value. However, there shouldn’t be any outstanding mortgage on the property. If you take over some existing mortgage, you will need to pay SDLT for the value compared to the relevant SDLT threshold.
Since you will be eligible for tax relief in these situations, you can eventually reduce the amount of tax you’re paying. You need to work with your stamp duty land tax advisor, who can help determine whether you’re eligible to pay the tax. The solicitor will further work out the Stamp Duty Land Tax returns and advise on the payment due to HMRC. Although you can do it yourself, using a solicitor or a conveyancer stamp duty advice is advisable. Having a solicitor guarantees that you submit the documents and make the payments on time. Moreover, even when you don’t have to pay the stamp duty land tax, you must file for a return on certain transactions.
Conclusion
Working with specialist property accountants will help you understand stamp duty land tax properly. You should hire a tax advisor, solicitor, or conveyancer for sdlt advice to guide you through the process. You should also get details about the taxes to make the right choices. You should be aware of the new laws and regulations so that you can file for the amount accordingly.
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