How Much Stamp Duty Will I Pay On My New House?

Make Sure You’ve Budgeted For Stamp Duty Tax

When you’re purchasing a new property, don’t forget about the extra fees you’ll need to budget for, which potentially include stamp duty tax.

Stamp duty is the tax that is owed on a property that you’re purchasing. The rate you’ll owe is based on the price as well as whether you’re a first-time buyer, home mover or investing in a second home. The amount of stamp duty you need to pay can often be quite significant, reaching several thousand pounds. This is why it’s important to include stamp duty as part of your budget and ensure that you have enough money saved up before placing an offer on the property of your dreams.

How Much Stamp Duty Do First Time Buyers Pay?

If you’re buying property in England or Northern Ireland, then you will only owe stamp duty on properties with a purchase price of over £300,000. If you purchase a property for less than this, then you’ll be charged £0, which means that as first-time buyers you could save up to £5,000 in tax. However, in certain areas of the country, particularly in London for example, it can be difficult to find a property for less than £300,000. For properties with a higher value than the threshold, you’ll need to pay the stamp tax rate of 5% on the portion of the price paid that is over £300,000. If you buy a house for £500,000, then you’ll pay 5% of the £200,000 difference.

How Much Stamp Duty Do Home Movers Pay?

If you’ve already owned a home before, then you’ll need to pay the standard rate of stamp duty tax. A professional team of Shenfield estate agents outlines that this is 0% for properties which are less than £125,000, 2% for those between £125,001 to £250,000, 5% for £250,001 to £925,000, 10% for the £925,001 to £1.5 million bracket and 12% for properties priced over £1.5 million.

How Much Stamp Duty Required for Second Homes?

If you already own a home and wish to purchase another, either for investment purposes such as a buy-to-let or a holiday home where you’ll only spend part of your time, then you’ll owe a 3% surcharge on top of the usual stamp duty rates. This is only applicable on properties that cost more than £40,000 and doesn’t include residences such as caravans, houseboats or mobile homes. It’s worth remembering that if there’s a small delay in selling your existing property, but you’ve already bought a new property with the help of a bridging loan for example, then this will be seen as a ‘second home’ and you’ll be required to pay stamp duty on both properties at the higher rate. However, if you’re able to subsequently sell your original accommodation within 3 years, then you should be eligible for a refund.

How Do You Pay Stamp Duty?

Stamp duty is paid as a lump sum during the purchase of your property. Usually you will pay this to your conveyancing solicitor, and they will then settle your stamp duty tax for you within a maximum of 14 days following completion. Be aware that prior to March 2019, you had 30 days to pay your bill, but the regulations have changed. The best advice is to pay this immediately to your solicitor so that there are no delays with payment. Failure to pay your stamp duty on time will result in a fine and you’ll usually have interest applied to the amount owed also.