BACK in 2020, Rishi Sunak delighted home buyers in England and Northern Ireland by lifting the threshold for stamp duty to £500,000 in response to the coronavirus pandemic.
But now the stamp duty holiday is long-gone, what are the rules, and how much might you pay? We explore below.
What is stamp duty?
Stamp duty is a lump sum payment anyone buying a property or piece of land over a certain price has to pay.
You pay the tax when you:
- buy a freehold property
- buy a new or existing leasehold
- buy a property through a shared ownership scheme
- are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house
The rate a buyer has to fork out depends on the price and type of property.
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You only pay when you hit a certain threshold- currently this is £125,000 for residential properties.
The threshold for non-residential land and properties is £150,000.
If you buy a property for less than these thresholds, then you don’t have to pay the tax.
Back in 2020 the Treasury temporarily raised the stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland in response to the coronavirus pandemic.
But that stamp duty holiday came to an end in July 2021.
Who pays for stamp duty?
Home buyers always pay for stamp duty, not the seller.
This is often done through a solicitor on your behalf as part of the buying process, according to HomeOwnersAlliance.
Home buyers have fourteen days from the date of purchasing a property to file a return to HMRC with any stamp duty due.
Not everyone pays the same amount.
If you are a first time buyer you can get a discount if the following applies to you:
- You, and anyone else you’re buying with, are first-time buyers
- The purchase price is £500,000 or less
This rule came in on July 1, 2021. You’ll also be eligible for this discount if you bought your first home before July 8, 2020.
How much will I pay?
How much you pay depends on whether the land or property is residential use or non-residential or mixed-use.
There’s a long list of different types of non-residential or mixed-use properties, such as shops, offices and agricultural land, which you can check here. The government’s Stamp Duty Land Tax Calculator can be used to understand what you should pay.
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