When you purchase a property, paying stamp duty is something you have to take into consideration when working out your budget. There is, however, a new law about to come into existence that will offer relief on stamp duty costs until 2025. Read on to discover why we have to pay stamp duty and what savings you could make under this new law.
What is stamp duty?
Stamp Duty Land Tax is a transfer tax which has to be paid to the government when you purchase a property. There are also similar forms of the same tax in Wales and Scotland: in Wales, it is called the Land Transaction Tax and in Scotland, the Land and Buildings Transaction Tax. The amount of stamp duty you have to pay is worked out based upon how much the property is worth and whether or not you are a first-time buyer. When you purchase a property, you will need to check which band your new home falls into.
There are also additional rules for second homeowners and leasehold properties. If you already own a main residential property and then buy a holiday home or a buy-to-let property, you will need to pay an additional 3% in stamp duty if the property is worth over £40,000. For leasehold properties, you will need to pay the stamp duty on the amount of the lease and the same rates will apply as a freehold property.
If you are looking to purchase a home and need conveyancing solicitors London, for example, specialists such as those seen here: https://www.samconveyancing.co.uk/Conveyancing-Solicitors/conveyancing-solicitors-london can provide advice on every aspect of the house buying process.
Changes in Stamp Duty Rates
As the UK is currently going through a challenging economic period, the government has introduced a temporary reduction in stamp duty that is anticipated to last until 2025. The Stamp Duty Land Tax (temporary relief) Bill has been passed by the House of Lords and will increase the threshold at which you have to pay stamp duty on a property from £125,000 to £250,000.
First-time buyers are also very well served by this bill as they can now buy a property worth up to £425,000 before they have to pay any stamp duty. The previous threshold for first-time buyers was £300,000 so this is a substantial increase that the government hopes will stimulate a stagnant housing market.
The current rates will now be as follows:
Property worth up to £250,000 – 0% in Stamp Duty
Property worth up to £925,000 – 5% in Stamp Duty
Property worth up to £1,500,000 – 10% in Stamp Duty
Property worth anything above £1,500,000 – 12% in Stamp Duty
The benefits of the changes in Stamp Duty
By increasing the thresholds, the government is hopeful that this will stimulate growth in the housing market, enable buyers to use more of their money as a deposit and will assist first-time buyers to get their foot on the property ladder.
