Stamp duty calculator: How much is stamp duty?
|property for sale, narrowed down the right mortgage deal, and now you’re ready to buy. It’s an exciting time! And naturally, when you buy a home, the experience comes with paying additional costs. One of them being stamp duty – or Stamp Duty Land Tax (SDLT) in official terms.
What is stamp duty? This is the tax that buyers need to pay to HM Revenue and Customs (HMRC) on the purchase of a property. And rarely can you escape it: the tax applies to both freehold and leasehold properties, and whether you’re buying the property with a mortgage deal or cash. Stamp duty is a tax where the rates vary depending on whether you’re a first-time buyer and the purchase price of the property.
The good news is that you no longer have to calculate the percentages in your head. Simply use the stamp duty calculator above to work out the rate you’d pay on your next purchase.
But what does a calculation of stamp duty actually look like? For example, what’s the stamp duty on a £400k home?
If you buy a property for £400,000 as your main residence, the stamp duty is:
0% on the first £250,000 and 5% on the remaining £150,000 (£5,000) so the total stamp duty you would pay is £7,500.
Most home buyers have to pay stamp duty. Aside from your mortgage, stamp duty may well be the biggest cost of buying a home. Whether or not you need to pay this tax depends on the cost of the property and your buying status (first-time buyer or not).
You don’t have to pay stamp duty on a home under £250,000. This rises to £425,000 for first-time buyers.
Stamp duty on first-time buyers works a little differently. While not exempt from this tax, you pay less when buying a house for the first time.
First-time buyers don’t have to pay stamp duty on their first home costing £425,000 or less.
For homes priced between £425,001 and £625,000, they’ll have to pay 5% on the amount above £425,001.
You’ll qualify for the first-time buyer exemption if:
If you do not sell your main property when buying another property, you’ll have to pay the higher stamp duty rates. This is because you’ll own two properties. You could be entitled to a stamp duty refund on your second home surcharge if you sell your main residence within 36 months of paying the additional 3%. You can do so on the gov.uk website.
For current homeowners, first start by knowing the value of your property. Book a free house valuation to get an accurate figure of how much it’s worth today.
First-time buyers in Scotland are exempt from paying the LBTT tax on the first £175,000.
Currently, there is no relief for first-time buyers in Wales. However, if the property is £180,000 or less you won’t have to pay stamp duty tax.
Are you wondering what’s the new stamp duty rate? Stamp duty rates changed in September 2022 for England, Northern Ireland and Wales. The next update is expected after 31 March 2025. The Land and Building Transaction Tax rates for Scotland was last updated in April 2021.
The best way to know the current rate is to use a calculator for stamp duty tax, such as the one above.
How do you pay stamp duty?
Typically, your solicitor or conveyancer deals with stamp duty on your behalf. They usually submit your return and pay the amount due on the date of completion. While some will add that amount to their fees, others will collect the amount from you in advance. Even though solicitors tend to deal with your stamp duty, you’re legally responsible for making sure this is all done on time. You’ll need to file a return even if you don’t owe any stamp duty.
Stamp duty must be paid within 14 days of completion. Check out more about when you need to pay stamp duty.
Are there any stamp duty exemptions?
You don’t have to pay stamp duty if:
Visit the gov.uk website for a full list of exemptions and reliefs.
Can stamp duty be added onto my mortgage?
If you don’t have enough savings to cover stamp duty as well as your deposit and other buying costs, it’s possible to add it onto your mortgage.
However, keep in mind that doing so will increase your long-term debt and you’ll be paying interest on your stamp duty for the full term of your mortgage. What’s more, borrowing more money to pay the stamp duty will impact your loan-to-value ratio (LTV) and could alter the potential mortgage deal you can get. Before making any decisions, speak to your mortgage adviser.
Can stamp duty be paid in instalments?
Unfortunately not. You can’t pay stamp duty in instalments. The full amount of the stamp duty tax owed must be paid to HMRC within 14 days of the completion of the property’s sale.
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If you’re beyond the point of ‘kicking the tyres’ and are ready to get started, book a free house valuation or instruct Purplebricks to sell your home. We charge a fair, fixed fee so you know exactly what you’ll pay from the start.
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