Selling your house? Moving house? Either way, you need to know the basics of the stamp duty. What is it, and how does it affect both of these processes?
What is the Stamp Duty?
The stamp duty land tax (in Scotland, this is called the Land and Buildings Transaction Tax) is a tax levied on those buying a property or land valued at over £125,000. The rate you will pay largely depends on the price of the property.
Essentially, under the new system, £0 for a house purchased for less than £125,000. If your purchase price is between £125,000 and £250,000, your tax is 2 percent, and if it is above £250,000 you pay 5 percent.
Let’s take a look at an example. Say you purchase a home for £480,000 — about the average in London. You would pay £14,000 in stamp duty. You send this to HMRC within 30 days of the completion of the sale.
You can find a stamp duty calculator here to help you prepare. Building this into the cost of moving is essential.
It is also important to think about the stamp duty land tax when pricing your home. Pay attention to the brackets. For example, pricing a house at £260,000 puts it at the 5 percent bracket rather than the 2 percent bracket. This can be a sticking point for some buyers as they will have to pay a higher tax. Is it worth pricing out some buyers? It may be, but you want to make sure to keep your options as open as possible. Make sure you consult your estate agent on this.
Still have questions about the stamp duty? We’re here to help!