What is Stamp Duty and How Much Will it Cost?
We’re guessing you’re reading this because you’re thinking about buying a new home, if that’s the case congratulations!
Stamp duty can be tricky to get your head around but once you’ve read this article you’ll have a much better understanding.
What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is the tax you pay to the Government when you buy property or land over a certain price.
When do I have to pay stamp duty?
There are a few different factors that determine whether you have to pay stamp duty or not. These include; whether you’re a first time buyer, the price of the property and the location. It’s also affected by whether you’re buying your first home, holiday home or an investment property.
How much stamp duty will I need to pay?
If the property you’re buying is £250,000 or less you don’t have to pay any stamp duty.
For properties in England and Northern Ireland over the amount goes up depending on the price of the property, but you won’t pay tax on the first £250,000 portion of the property price.
From 23rd Sep 2022, stamp duty is payable at these rates:
Tax Band | Normal Rate | Additional Property |
Less than £250k | 0% | 3%* |
£250k to £925k | 5% | 8% |
£925k to £1.5m | 10% | 13% |
rest over £1.5m | 12% | 15% |
It can be tricky to work out so it’s best to use a stamp duty calculator.
*If you’re buying a holiday home or second home between £40k and £250k you’ll pay an extra 3% on top of the usual stamp duty rates.
What stamp duty do I pay as a first time buyer?
As a first time buyer if the property you’re buying is £425,000 or less you won’t pay any stamp duty. There is further relief available for transactions up to £625,000 in more expensive locations like London.
For any property that’s £425,000 - £925,000 you’ll be charged at 5% on the remaining property value over £425,000 - £925,000.
If your first home is over £625,000 you won’t qualify for first time buyers’ relief so the standard rates of stamp duty will apply.
How do I pay stamp duty?
You need to pay any stamp duty within two weeks of completing the sale. Your solicitor will take care of this for you but you can do it yourself if you want to. Most people will let their solicitor take care of it as part of the conveyancing process.
I don’t have a lump sum, can I add the stamp duty to my mortgage?
The short answer is yes. The amount you take your mortgage out for needs to cover the cost of your new property (minus the deposit) plus the stamp duty cost, so make sure you can get a mortgage to cover this amount.
When the money for your mortgage is released by the bank it will go into your solicitor’s account so they can complete the sale, they’ll use the remaining money to pay the stamp duty.
We hope that helps. If you’re looking for a new home in East Yorkshire why not take a look at our homes - they’re perfect for first time buyers, growing families and those looking to downsize.