Everything You Need to Know About Stamp Duty

Stamp Duty rates in England changed with effect from 1 July, as the tax holiday introduced in June 2020 starts to be phased out.

It means house buyers will have to pay stamp duty again for purchases above £250,000.

 

What is stamp duty, and what does it pay for?

Stamp duty land tax is a payment to the Government, in order to obtain a Certificate of Land Ownership from the HM Revenue & Customs, which states that the land on which your new property sits is legally and officially owned by and registered to you.

If you are liable to pay stamp duty but don’t pay it, you won’t be allowed to officially purchase your new home.  So you should discuss with your solicitor whether you will need to pay stamp duty on your first home, and how much it will be, so you can ensure that you factor in this cost and don’t miss the payment deadline – which we will explain below.

How much stamp duty will I need to pay?

The table below can be used to help you work out the amount of stamp duty that is due between 1 July 2021 to 30 September 2021.

Please note that these rates apply whether you are buying your first home or have owned a property before. An additional rate of 3% applies to purchases of additional dwellings.  

 

Purchase Price

Stamp Duty Rate

Up to £250,000

0%

£250,001 - £925,000

5%

£925,001 - £1,500,000

10%

 £1,500,000+

12%

 

 

From 1 October 2021, rates are due to return to normal. That means the point you to start paying stamp duty will revert back to £125,001:

 

Purchase Price

Stamp Duty Rate

Up to £125,000

0%

£125,001- £250,000

2%

£250,001 - £925,000

5%

£925,001 - £1,500,000

10%

 £1,500,000+

12%

 

You can use the government's Stamp Duty Land Tax (SDLT) calculator to find out how much you would pay.


 

When does stamp duty need to be paid, and how do I pay it?

Where stamp duty charges apply, you must pay within 30 days from the date of completion of the purchase of your first home – when the contracts are signed and dated, and you have your keys. Your solicitor will typically arrange the payment of stamp duty for you, often before your purchase is completed, however it’s your legal responsibility to ensure that your stamp duty is paid.

If your stamp duty isn’t paid within the required 30 days, you may be fined and even charged interest on the outstanding cost, so it’s really important not to leave it until the last minute!

What are the rules around stamp duty on new builds?

If the property you are buying is a new build, stamp duty will be payable on the price you are paying for your new home (if it exceeds £250,000), which will include fixtures and fittings that are ‘attached’ to the building – for example, kitchens and fitted wardrobes. You may find that many house builders offer incentives to buyers which can help to cover the cost of stamp duty.

Can I add stamp duty to my mortgage?

It’s not possible to add the cost of stamp duty to your first time buyer mortgage. If the value of the property you want to buy exceeds £250,000, you’ll need to factor in the cost of stamp duty along with how much you have for a deposit, and how much you want to borrow for your mortgage.

For all of our useful guides and tools to help you on your journey to buying your first home, visit our First Time Buyers page. To compare the different types of mortgage deals that are currently available, get in touch with one of our mortgage advisers to begin your mortgage application process.

Your mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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