What is Stamp Duty and when do you pay it?
Amy Kadir, Lonsdale Mortgages broker based in St Albans, Hertfordshire
Amy Kadir, St Albans mortgage broker explains how Stamp duty works
Tuesday 22 June, 2021
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax you might pay if you purchase a residential property or land over a certain price in England or Northern Ireland.
Call our mortgage brokers on 01727 845500 to understand Stamp Duty charges
Our mortgage brokers offer you general mortgage advice including the costs of stamp duty for your property purchase. We are a ‘no-fee’ mortgage broker and will not charge you any fees for our mortgage services, except when you re-mortgage through us with your existing lender. Otherwise, we are paid commission by your provider when your mortgage completes. Call our mortgage brokers on 01727 845500 to find out how you can save time and money with your property purchase.
Stamp Duty costs up to 30th June 2021
Until 30th June 2021 if you buy a main home for less than £500,000 you will pay no Stamp Duty. This applies whether you are a first-time buyer or have owned a property before. If your property costs over £500,000 you will pay the Stamp Duty rate based on the value of the property over £500,000. If you are buying a second home or another additional property you pay an extra 3% Stamp Duty in addition to the revised rates for each band. This tax applies to both freehold and leasehold properties, and if you are buying a property with or without a mortgage.
Stamp Duty example
If you purchased a property for £600,000 you will pay the following Stamp Duty:
0% on first £500,000
5% on the following £100,000
Total Stamp Duty cost: £5,000
This is a saving of £15,000 compared to the cost of Stamp Duty before 8th July 2020
Stamp Duty costs 1st July to 30th September 2021
If your residential property costs less than £250,000 you will not have to pay any Stamp Duty. If you are a first-time buyer who is buying a property costing up to £300,000 you also don’t pay any Stamp Duty, and you pay a discounted rate up to £500,000.
For everyone else there is still no Stamp Duty to be paid on any purchases below £250,000. 5% Stamp Duty costs on a purchase price from £250,001-£925,000, and 10% on costs from £925,001-£1.5 million. Stamp Duty will cost 12% on any purchase price above £1.5m.
Stamp Duty example
If you were a first-time buyer purchasing a property for £350,000 you will pay the following Stamp Duty:
0% on the first £250,000
5% on the remaining £100,000
Total Stamp Duty cost: £5,0000
This is a saving of £7,500 compared to the cost of Stamp Duty before 8th July 2020
Stamp Duty costs after 1st October
Unless you are a first-time buyer from 1st October 2021 you will pay Stamp Duty on properties that cost over £125,000. Between £125,000-£250,000 you pay 2% Stamp Duty. From £250,001-£925,000 you pay 5%. You pay 10% on costs from £925,001-£1.5 million. Stamp Duty is 12% on any purchase price above £1.5m.
Purchasing a second home – what Stamp Duty do you pay?
You pay an extra 3% in Stamp Duty above the revised rates for each band. It applies to property purchases above £40,000 but excludes caravans, mobile homes or houseboats.
For the first £500,000 you pay 3% Stamp Duty. On purchases from £500,000-£925,000 you pay 8%, £925,000 to £1.5 million you pay £13% Stamp Duty and any property over £1.5m the cost is a 15% Stamp Duty charge.
When do you pay Stamp Duty?
Your solicitor will usually organise payment if necessary. Even if you don’t have to pay Stamp Duty you have to complete the paperwork. You have 14 days to file a Stamp Duty Land Tax return. If you don’t pay on time HMRC may charge you penalties and interest.
Amy Kadir, Lonsdale mortgage broker in St Albans, Hertfordshire said:
‘If you are looking to move home or are a first-time buyer or purchasing a buy to let property, call the Lonsdale Mortgages broking team on 01727 845500 for Stamp Duty advice. We understand the Stamp Duty rules and can offer appropriate mortgage advice for your circumstances. We can calculate how much Stamp Duty you will save if you purchase a home before 1st October. Remember a first-time buyer is classed as someone who is purchasing their only or main property and has never owned a freehold property or had a leasehold interest in a UK property or an overseas residential property.’
In Summary...
If you want to purchase a new home, please contact your local Lonsdale Mortgages broker for personalised mortgage advice. We have established long-term relationships with customers who have used our services on many occasions. Most mortgage customers live in Hertfordshire, Bedfordshire, Buckinghamshire and London, and we generally work with clients in St Albans, Harpenden, Luton, Leighton Buzzard and Radlett. Call our qualified mortgage broking team now on 01727 845500 to find out how much you can borrow and what mortgage products are best suited to your financial needs.
As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.
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