Stamp Duty

Another cost to consider.

Don’t forget to factor in the cost of Stamp Duty Land Tax when doing your sums and working out how much you can afford to borrow.

Stamp Duty Land Tax replaced Stamp Duty in December 2003 and is a tax on the documents that transfer ownership of a property. You pay Stamp Duty Land Tax on houses, flats, buildings and land – unless the property or land costs less than £125,000 – or, if the property is an area which the Government has designated as “disadvantaged”. If you buy in a “disadvantaged” area, then you don’t pay any Stamp Duty Land Tax if the purchase price is £150,000 or less. This is worth bearing in mind if you want to avoid paying Stamp Duty and are looking to buy in property hotspot areas such as London and the South-East of England, where it may be difficult to find a property with a purchase price less than £120,000.

How much Stamp Duty Land Tax must I pay?

The amount of Stamp Duty Land Tax that you must pay depends on the purchase price of the property. If your new home costs more than £125,000, you must pay between one and four per cent of the purchase price, on a sliding scale.

Buying a property in "disadvantaged" areas

The Government has designated around 2,000 areas in the UK as “disadvantaged” areas. These areas have special Stamp Duty Land Tax treatment. You won’t have to pay Stamp Duty Land Tax if you buy a residential property in one of these areas and the purchase price is £150,000 or less.

HM Revenue and Customs provides the full list of designated “disadvantaged” areas in the UK.

Paperwork

As the buyer, it’s your responsibility to complete the paperwork and pay the Stamp Duty Land Tax. Your solicitor will usually handle this for you and send it to HM Revenue and Customs.