Stamp Duty Land Tax

Stamp Duty Land Tax – what exactly is it and how much will it cost you when moving home?

Stamp Duty Land Tax (SDLT) was introduced in December 2003 and replaced Stamp Duty. SDLT is a tax on the purchase price of the house you are buying and applies to all purchases of properties, where the purchase price is above a certain threshold.

Your solicitor will advise you of all the costs involved in moving house, of which SDLT can often be a substantial one. Your solicitor will explain to you how SDLT is calculated and under what circumstances you will be exempt from paying SDLT. It is important that you have a clear picture of exactly what costs you will face when moving home as SDLT, the cost of surveys, removal companies and search fees can add up to a substantial sum and may affect the amount you have budgeted to offer on a property.

If you are a first time buyer you will for a temporary period be able to purchase a property for a higher amount than those who have already owned a property before having to pay Stamp Duty Land Tax. As long as you have never owned (including property gifted to or inherited by you) or purchased a property before (and if you are purchasing a property jointly with somebody else, they must never have owned a property before) you will not start paying SDLT until the purchase price of the property reaches £250,000. Therefore if you are purchasing a property for less than £250,000, and the conveyancing transaction is carried out between 25th March 2010 and 25th March 2012, you will not have to pay SDLT on the purchase price of your property.

However, if you are not deemed to be a first time buyer the threshold for being liable to pay Stamp Duty Land Tax will be considerably lower. If the property you are purchasing has a purchase price of £125,000 or more you will pay between 1% and 4% of the property purchase price, depending on the exact amount of the transaction. The amount of SDLT payable can also depend on whether you are purchasing a property for residential or non-residential purchases and on whether the property is freehold or leasehold.

Your solicitor will talk you through the current rates of SDLT payable and will ensure that the Stamp Duty Land Tax Return (or Land Transaction return) is completed correctly so that you fulfil your requirement to inform H M Revenue & Customs of your purchase.

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