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What is Stamp Duty?
Information provided courtesy of Brockmans Solicitors

If you buy a residential property in the UK and pay more than £125,000 you will generally have to pay Stamp Duty Land Tax (SDLT), this was previously known as Stamp Duty. There are certain “disadvantaged areas” which have special SDLT treatment, and if you buy a property within those areas you do not have to pay any SDLT on a residential property costing less than £150,000.

The rate of stamp duty increases the more you pay for a property. Present rates are as follows:

- Up to and including £125,000 - SDLT
- £125,001 to £250,000 - SDLT at 1% of the purchase price is payable
- £250,001 to £500,000 - SDLT at 3% of the purchase price is payable
- £500,001 plus - SDLT 4% of the purchase price is payable.

Please note SDLT is paid on the whole purchase price, not just the amount by which the price exceeds £125,000 or if you have crept into the 3% (the amount by which the purchase price exceeds £250,000). For example if you pay £126,000 for a house then the SDLT will be 1% of the full price (i.e. £1,260) and if you buy a house costing £251,000 the SDLT will be £7,530 (i.e. 3% of the whole purchase price).

How do I pay Stamp Duty on a Shared Ownership Property?

You can either pay Stamp Duty Land Tax on each separate stage of a phased purchase by reference to the prevailing rates of tax in force at the time, or alternatively, can make a market value election by paying tax as if the property had been purchased outright from the beginning.

The decision whether to pay on the market value basis is a matter for you and your legal advisers.

The HM Revenue and Customs website will give more detailed advice and full details of current rates of SDLT. Please click on the following link to go directly to the Revenue and Customs website www.hmrc.gov.uk.

General Disclaimer

Brockmans Solicitors has provided the above information to MyPlace. Consequently we cannot endorse the accuracy of any information that is contained here or any related sites.