From 8 July, the new Stamp Duty Land Tax (SDLT) threshold of £500,000 will apply and will run until 31 March 2021. This means any buyer purchasing a primary residential property between 8 July 2020 and 31 March 2021, up to the value of £500,000, will be exempt from paying Stamp Duty.
Depending on your circumstance, the tax thresholds change, for example the price of the property and whether you are buying an additional property, will impact the amount of tax you pay.
On purchases over the £500,000 threshold, buyers will pay a 5% SDLT on the portion from £500,001 to £925,000, 10% on the portion from £925,001 to £1.5 million and 12% on any portion over £1.5 million.
When it comes to purchasing a second home, the higher additional rates remains with a 3% higher rate on top of the new revised standards. So, if you are purchasing a holiday home up to the threshold value of £500,000, you will pay 3% SDLT. Those buying a second home over the threshold with pay 8% on the portion from £500,001 to £925,000, 13% on the portion from £925,001 to £1.5 million, and 15% on the remaining portion over £1.5 million.
On new leasehold sales and transfers, the nil rate band which applies to the net present value of any rents payable for residential property is also increased to £500,000 until the end of March next year. A SDLT of 1% will be charged on any net present value of any rent over the threshold.
Companies purchasing residential property under the £500,000 threshold will also be exempt from paying SDLT. In addition, companies that buy residential property of any value that meet the relief criteria from the corporate 15% SDLT will also benefit from the change made.
From 1 April 2021, the SDLT holiday will come to an end and the SDLT regulations will revert to what they were before these temporary changes were announced.
As there are many different types of stamp duty tax, we have created a stamp duty calculator to help you work out how much you will have to pay for the property you buy. Simply fill out the purchase price and see what your tax will be.
Land Transaction Tax (LTT) is payable when you buy or lease a building or land over a certain price in Wales. From 27 July, no tax is paid on the first £250,000 of a property, however, it increases to 5% up to £400,000, 7.5% up to £750,000, 10% up to £1,500,000 with any amount thereafter taxed at 12%. This will apply and will run until 31 March 2021.
A 3% surcharge applies to all transactions involving the purchase of an additional property. This includes second homes and buy-to-let investments. The surcharge applies to the full purchase price above an initial threshold of £40,000.
Specific first-time buyer relief is not currently available under the LTT system.
When you buy a residential property (freehold or leasehold) on or after 27 July, the following rates will apply to the portion of the price you pay in each band.
LTT does not apply to rents payable under a lease for residential property.
When you buy a residential property and you already own one or more residential properties you may need to pay the higher residential rates.
If you are replacing your main residence, the higher rates may not apply.
Land and Buildings Transaction Tax (LBTT) requires home buyers to pay tax on amounts between bands, as opposed to the full purchase price of a property.
LBTT rates in Scotland are different to the taxation rates in the rest of the UK. The following changes have been made as of 15 July and will run and apply until 31 March 2021.
If purchasing your primary property, the first £250,000 will be exempt from tax. Between £250,001 and £325,000 a buyer will pay 5% LBTT, then 10% on the amount between £325,001 and £750,000 with any amount thereafter taxed at 12%.
For transactions where the purchase price is above £250,000, the rates that usually apply remain unchanged.
Since 30 June 2018, first-time buyers in Scotland have benefited from a relief on LBTT. This raises the zero-tax threshold for first-time buyers from £145,000 to £175,000.
To find out how much you will be required to pay for your new home, simply fill out the form on our Stamp Duty Calculator, selecting where you are buying the property from the dropdown of options.
Your solicitor will usually deal with your Stamp Duty return and any related payments, although this can be done yourself. The most important thing is that your Stamp Duty is submitted and paid on time.
This is an important question, and it is crucial to know that wherever in the UK you’re buying a property, you have 30 days from the date you of competition to pay the full stamp duty fee. If you take longer, you will be faced with a fixed penalty, and you will pay a tax-based penalty as well as the fixed penalty. It is really important that you pay your Stamp Duty fee on time.
This mainly depends on your personal circumstances. It is best that you don’t add it to your mortgage, however, many people do as they have to. Adding the Stamp Duty fee to your mortgage will essentially mean that you need to borrow more when your mortgage is being taken out. You will use your ‘extra’ deposit money to pay the Stamp Duty.
Buyers of additional residential properties, this includes second homes and also buy-to-let properties, will be required to pay a different percentage. Use our calculator above to find out more.
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