What is the Stamp Duty Land Tax?
If you buy a property or land that costs over a certain amount, you must pay stamp duty land tax. The tax is different if the property is in Scotland or Wales; in Scotland, you pay Land and Buildings Transaction Tax, and in Wales you pay Land Transaction Tax.
When do I have to pay the tax?
You’ll be liable for paying the tax when you do any of the following:
Buy a freehold property
Buy a new leasehold
Buy an existing leasehold
Buy a property through a shared ownership scheme
You will need to pay tax if your property is over the threshold. The current threshold for residential property is £125,000. If your property or land cost less than that, you won’t have to pay stamp duty land tax. The threshold for non-residential land and properties is currently £150,000.
How much do I have to pay?
There are many factors that will impact how much tax you pay, such as whether the property or land is residential, mixed-use, you’re a first time buyer, you already own a property and you’re buying additional properties, or you’re not a UK resident.
You can work out how much tax you’ll have to pay by using the HMRC Stamp Duty Land Tax calculator.
As of 1st July 2021, first time buyers will receive a discount, known as ‘relief’, that means you’ll pay less or no tax if the purchase price is £500,000 or less, and both you and anyone else you’re buying with are first time buyers.
How do I pay the tax and when does it need to be done?
You’ll have 14 days from the day of completion on your property transaction to pay the tax.
Generally, your solicitor or conveyancer will file your stamp duty land tax return for you and pay the tax on your behalf. They’ll likely do this on the day of completion, and will add the amount to the fees you’ll pay them. They will also apply for any relief you’re eligible for.
If they don’t do this for you, you can do it yourself on the government website. If your return has not been filed and the tax hasn’t been paid within 14 days, you could be charged penalties and interest.