What is Stamp Duty and Why Do You Need it?

Are you ready to take the next step and buy your own property but you’re not sure about the costs involved?

As a homeowner, there are many things you need to consider before getting the keys to your new property. For instance, there are certain taxes you have to pay, depending on the size and financial value of your residence.

While you might have heard of it, do you know what exactly is stamp duty and how it can influence your home-buying process? We’ve got you covered with the key things to know about stamp duty tax and how to make your house-buying process as smooth as possible.

What is Stamp Duty?

Stamp duty, also known as Stamp Duty Land Tax (SDLT), is a tax you must pay to HM Revenue & Customs when you buy a residential property in England, Wales, or Northern Ireland that exceeds a certain threshold. However, starting from October 2021, you will pay Stamp Duty on residential properties costing more than £125,000, unless you qualify for first-time buyers relief.

If you’re a first-time buyer, you can be exempt from paying the stamp duty if your property costs £300,000 or less. While the discount was introduced in 2007, the first-time buyer relief is not applicable to all properties. For instance, if your property values more than £500,000, then you will not be entitled to any relief and will pay SDLT at the normal rate.

In Scotland, the starting threshold for first-time buyers is £175,000 and the first-time buyer relief doesn’t apply in Wales.

How much do you have to pay?

As stated above, the rates for the stamp duty tax differs depending on whether you’re a first-time buyer or not. However, how much you pay is also influenced by whether the land or property is of residential or non-residential use. Additionally, purchasing a second home or a buy-to-let will also influence the amount of money you pay for your stamp duty.

While you are responsible for paying the stamp duty tax on time, you can get your solicitor or conveyancer to pay your stamp duty on your behalf. You have 14 days since buying your property to submit your payment and make sure you don’t have any outstanding bills.

Want to learn more about how much is your stamp duty depending on your circumstances? You can use the HM Revenue and Customs’ (HMRC) Stamp Duty Land Tax calculator to work out how much tax you’ll pay.

Are there any Stamp Duty exceptions?

According to HMRC, there are a few other situations that can make you exempt from the stamp duty tax. Some exemptions include:

• The property is left to you in a will.
• You buy a freehold property for less than £40,000.
• No money or other payment changes hands for a land or property transfer.
• You buy a new or assigned lease of 7 years or more, as long as the premium is less than £40,000 and the annual rent is less than £1,000.

If you are considering buying a property in Manchester, let our conveyancing solicitors take your worries away and make your home-buying process hassle-free.

Contact us at  0161 930 5350 or fill out our online contact form for a free, no-obligation and confidential discussion about your new property.