Stamp duty

 

What is stamp duty?

Stamp duty, or Stamp Duty Land Tax, is a form of taxation payable to the UK government on property transactions above a certain value.

Stamp duty is charged on all qualifying transactions, including those for land, houses, flats and other buildings.

Stamp duty rates and the amount owed vary depending on the value of the property, its location, and whether the property is residential or non-residential. There are a number of factors at play, and it’s important to know all the details.

Is stamp duty payable on freehold and leasehold property interests?

Stamp duty is payable on both freehold and leasehold transactions. The stamp duty payable on leasehold property varies depending on whether the transaction is for a new lease, or an existing one.

Generally stamp duty is paid on the value of the lump sum that is paid to transact the lease. When a new lease is bought, and more than nominal rent is to be paid under that agreement, stamp duty must also be paid on the rental value over the life of the lease.

What are the current stamp duty rates?

The current (2013) stamp duty rates on standard residential property start on properties above £125,000 in value. If you are a first time buyer, you are exempt from paying stamp duty on property up to £250,000. The current stamp duty rates are:

  • 0% for residential property under £125,000
  • 1% for property valued between £125,000 and £250,000
  • 3% for property valued between £250,000 and £500,000
  • 4% for property valued between £500,000 and £1m
  • 5% for property valued between and £1m and £2m 
  • 7% for property valued over £2m

For the most up-to-date rates go to www.gov.uk/stamp-duty-land-tax-rates.

What if my property is in a disadvantaged area?

The government has set a separate level of rates for stamp duty on all properties transacted in disadvantaged areas. Disadvantaged Areas Relief applies to residential property in a disadvantaged area where the amount paid for the property is less than £150,000. There are over 2,000 disadvantaged areas in the UK, a list of which is available from the HMRC website.

What are the current rates on non-residential property?

Non-residential property is charged stamp duty under a slightly different set of rates. Non-residential property includes:Shops and offices

  • Agricultural land
  • Forest areas
  • Other buildings not used as dwellings
  • Portfolios of residential property containing six or more units

The rate for these types of property depends on rental value.

It is always recommended to seek legal advice if you are purchasing land or property, so the required legal checks are undertaken. A conveyancing solicitor can help you with all aspects of the property purchase process.

Still unsure as to what level of stamp duty you should be paying? Contact Law can put you in touch with a specialist conveyancing solicitor, for either residential or commercial property, to help you complete the relevant paperwork. Please call us on 0800 1777 162 or complete the web-form above.

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