What is stamp duty?

Document signAnyone who has moved home knows what a stressful experience it can be, as well as an exciting one. As we explained in our recent blog post, the property chain is one of the main causes of stress, but there are others, including the many costs involved when moving home. One such cost is stamp duty.

Stamp duty land tax, or stamp duty for short, is a tax that is levied on homes which cost £125,000 or more to buy, which affects more and more people as house prices climb.

The amount of stamp duty that is levied on someone purchasing a home is dependent on the price of a property, and house buyers can expect to pay anywhere from 1% of the value of their property to 7% for more expensive properties, as shown below.

Purchase price Rate applicable
Up to £125,000

0%

£125,000.01-£250,000

1%

£250,000.01-£500,000

3%

£500,000.01-£1,000,000

4%

£1,000,000.01-£2,000,000

5%

£2,000,000.01+

7%

Stamp duty is applied to the total cost of your property, so if your house cost £124,999 you would pay nothing, but if it cost £125,001 you would need to pay 1% of that whole amount.

There are very few scenarios where stamp duty does not need to be paid. Even if you swap properties with another home owner and no payments are involved you would still have to pay the applicable rate according to the market value of your property.

We know that moving home can be a stressful experience but by preparing yourself as much as possible, you can, at least, know what to expect. Read our latest article on what to expect when moving home for more ideas and advice.

Agree? Disagree? Do let Cooks Solicitors know what you think by commenting below.

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