What is stamp duty?
Stamp duty is a tax which you have to pay when you buy a property over a certain value. The stamp duty is paid by the UK residents and also by the non UK residents at a surcharge of 2% for buying property in the UK which costs more than £ 40 000.
The Stamp duty cut in the mini budget
As part of the government's growth plan 2022, the chancellor announced that the stamp duty cuts.The changes are as follows:
- No tax will be paid by the buyer on the purchase of a property of upto £250 000( which was previously £125 000)
- The threshold for the first time buyers has increased to £425 000 which was previously £300 000
This stamp duty cut applies to any purchases that are finalised on or after 22 September 2022. You can also benefit from the stamp duty cuts if you are in the process of buying the house.
If you want to know how much stamp duty you will have to pay as first time buyers or as purchasers of additional property go to our stamp duty tax calculator
Do the changes apply to the landlord as well?
These changes apply to the landlords as well, however, the landlords will continue to pay the additional 3% surcharge on the purchase of an additional property. The 3% surcharge will apply when you are buying a second home as an investment buy to let or a holiday home. However,it will not apply on the purchase of caravans, house boats or mobile homes
The 3 year rule
If you buy a second property which will be your main residence now but there was a delay in the selling of your previous property which was your main residence you must have paid the higher rates of the stamp duty as you owned 2 properties at one time. However, there is a 3 year rule, according to which if you sell your previous property within 3 years of buying the new one you can apply for a refund for the additional rates which you paid above the normal stamp duty rates.
How much stamp duty will I pay if I buy a buy-to -let property
The additional stamp duty will apply to any property which is bought for £40 000 or more.
How much stamp duty you pay depends on the price of the property. The thresholds and rates are listed in the table below:
|
Property price / transfer value
|
Stamp duty rate
|
|
Upto £250 000
|
3%
|
|
From £250 000 to £925 000
(the rate will apply to £675, 000)
|
8%
|
|
From £925,001 to £1.5 million
(the rate will apply to the next £525,000)
|
13%
|
|
From £1.5 million above
(the rate will apply to the remaining amount)
|
15%
|
Stamp duty tax relief for multiple dwellings
According to HMRC you can get a relief when you buy more than one dwellings if a transaction include freehold and leasehold interests in more than one dwelling.This means that if the home buyer is purchasing multiple properties they can claim this relief. Landlords can be benefitted by this relief as well. For more on this relief you can contact Taxaccolga and our property accountants can help you.
Taxaccolega, accountants based in croydon,London specialises in property tax, inheritance tax, social media tax, personal tax and corporation tax. For any queries related to book keeping, tax planning please contact us at 020 8127 0728 or email us here