A buyer has to pay a compulsory stamp duty on the purchase of the property. Stamp duty is self-assessed tax and charged on all land transactions. Buyer has 30 days from the effective date of the transaction to submit the land transaction return along with the payable stamp duty to HMRC.
Often the completion date is deemed as the effective date of the transaction. Where a buyer fails to pay the stamp duty within 30 days’ time period, the buyer will have to pay interest on the due stamp duty. It is important that as a buyer you must ensure the prompt provision of funds for stamp duty. Failure to pay the stamp duty will delay the registration and transfer of the title with the land registry as well.
In case of residential property, you do not pay any stamp duty if the value of the property is less than £125,000 and then on an increasing proportion of the value of the property which is above £125,000. The following bands are currently applicable to the purchase of freehold and the leasehold properties.
|A. £0 – £125,000|
|0% /No Stamp duty|
|B. Next £125,000|
(From £125,001 – to £250,000)
|C. Next £675,00|
(From £250,001 – to £925,000)
|D. Next £575,000|
(From £925,001 – to £1,500, 000
|E. Any amount /value above £1,500,001||12%|
Non-Residential and Mixed Used Properties
If you are buying a non-residential and mixed-use property you do not pay any Stamp Duty if the value of the property is less than £150.000. For properties valued over £150,000 following bands will apply
|Value of the Non-Residential and Mixed Property (Freehold)||Applicable Rate|
|A. £0 – £150,000||0% No Stamp duty|
|B. £150,001 – £250,000||2% on £100,000 (B £250,000 – A 150,000)|
|C. £250,001 and above||5 % of the amount above £250,001|
Mixed Used Property Example
Property value = £300,000
0% Stamp duty = first £150,000 × 0% = £0.00
2% Stamp duty = £250,000 – £150,000 = £100,000) £ 100,000 × 2% = £2,000
5% Stamp duty = The remaining amount (£300,000 – £250,000 = £50,000). £50,000 × % 5 = £2,500
Total Stamp duty payable on Property valued at £300,000 = £0 + £2,000 + £ 2,500 = £ 4,5000
If you have any question regarding the stamp duty or would like to instruct us on a fixed fee bases for the purchase of your first home, contact our experienced property lawyers instantly through Instant Access for initial consultation.
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