You usually pay Stamp Duty Land Tax (SDLT) on increasing portions of the property price above £125,000 when you buy residential property, eg a house or flat. However there are different rules which have recently been implemented if you’re buying your first home and the purchase price is £500,000 or less. If you’re buying your first home or if anyone you are buying with is buying their first home you can claim a discount (relief) so you don’t pay any tax up to £300,000 and 5% on the portion from £300,001 to £500,000. If the price is over £500,000, you follow the rules for people who’ve bought a home before.
Rates if you’ve bought a home before
Freehold sales and transfers
Property or lease premium or transfer value
Up to £125,000 – Zero
The next £125,000 (the portion from £125,001 to £250,000) – 2%
The next £675,000 (the portion from £250,001 to £925,000) – 5%
The next £575,000 (the portion from £925,001 to £1.5 million) – 10%
The remaining amount (the portion above £1.5 million) – 12%
For Example: If you buy a house for £275,000, the SDLT you owe is calculated as follows:
· 0% on the first £125,000 = £0
· 2% on the next £125,000 = £2,500
· 5% on the final £25,000 = £1,250
· Total SDLT = £3,750
If the property you are buying is a second home or a buy to let you pay the above rates but with an additional surcharge of 3% added. So for example 0-£125,000 rather than being 0 would be 3%. £125,000-£250,000 is 5% rather than 2% etc.
There is a caveat to that in that if this is a temporary measure due to a job move for example and you sell your other residence within 36 months, you can claim the 3% surcharge back.
For any further clarity, feel free to contact our office on 01524 771888