What Is Stamp Duty And How Will The ‘Stamp Duty Holiday’ Affect Me?
Here at Britannia Fleet Liverpool, we understand that these are complicated times to be living through and moving in. That’s why we’re committed to simplifying things as much as we can for our customers. Take a look at our brief rundown of the new stamp duty changes, as recently announced by the UK government.
In a nutshell:
Stamp duty is a tax on homebuyers that can be pretty costly when purchasing a new property. This week (Wednesday 8th July 2020) the UK government have announced some stamp duty relief measures which will come into immediate effect, and remain in place until 31st March 2021.
Whether you’re a first-time buyer or you’re moving house, let us take you through the main things you need to know about stamp duty, its costs and when you need to pay.
So what exactly is stamp duty and who has to pay?
Stamp duty, or Stamp Duty Land Tax, is a levy that you’re required to pay to HM Revenue & Customs when buying a home.
This is a fee paid by the person buying a property. How much you’ll pay up depends on a number of factors, such as where the property is, how much you’ve paid for it and whether or not it is your only property.
The cost of stamp duty
The rate of stamp duty you’ll be required to pay depends on what price threshold your property falls under and the whereabouts of your property too. It’s also worth noting that there are different rates in Scotland and Wales compared to England and Northern Ireland. Another factor is whether you qualify for stamp duty relief as a first-time buyer or whether you have to pay a surcharge because you are purchasing a second home, or perhaps a buy-to-let.
How much is stamp duty in England and Northern Ireland after July 8th 2020?
New rates come in effect July 8th, 2020 – March 31st 2021
Since April 2016 in the UK, there has been a stamp duty surcharge for anyone buying additional properties. If at the end of the purchase process, you will own two or more properties then you’ll be required to pay a 3% stamp duty rate on top of your regular stamp duty bill on properties over £40,000. With new stamp duty rates in effect from July 8th, 2020 until March 31st, 2021, there is no stamp duty on properties up to £500,000, so only the surcharge rates apply.
How can I calculate the stamp duty I owe?
Stamp duty is calculated in the same way as income tax. As an example – if hypothetically the final price of a home being purchased by an existing homeowner is £550,000, then stamp duty will be calculated as follows:
0% on the first £500,000 = £0
5% on the next £50,000 = £2,500
Total stamp duty payable = £2,500
So how do I go about paying my stamp duty?
You will have 14 days after the completion of the purchase of your property to file a return to HMRC and pay whatever stamp duty you owe.
Your solicitor or conveyancer should help you to calculate and settle your stamp duty bill on your behalf. Normally they will submit your return and pay the stamp duty on completion day, having collected the money from you in advance.
If you’d like more guidance on stamp duty, a member of our helpful team at Britannia Fleet will be happy to point you in the direction of more detailed resources and assistance, so feel free to contact us. We recommend that you visit the UK Government website for further information on the matter.