It can be seen that once the thresholds are exceeded, even by a small amount, there is a marked increase (over £5,000) in stamp duty. It is therefore sensible to avoid properties that are priced just over the thresholds. For example a house costing £265,950 will cost £5,479 in additional in stamp duty. Obviously it is common sense in such cases to negotiate a deal with the seller to bring the “price” under the £250,000 threshold or get the seller to pay towards the additional stamp duty.
SDLT is an unpopular tax burdening first-
Disadvantaged Area Relief
If you decide to buy a property in an area designated by the government as 'disadvantaged'
you may qualify for Disadvantaged Areas Relief. If this is the case the nil-
Zero Carbon New Homes
Relief from Stamp Duty Land Tax (SDLT) was introduced in October 2007. All qualifying new homes under £500,000 are EXEMPT. For homes exceeding £500,000 the Stamp Duty payable is reduced by £15,000. Zero Carbon homes must have sufficient additional renewable power to cover the average consumption of the house over the course of a year. This effectively means that the house will need to be insulated and built to very high standards and incorporate the latest heat recovery and renewable energy technologies.
Stamp Duty Land Tax reduced rates for multiple residential purchases
After the Royal Assent to the Finance Act 2011, anyone who buys several residential properties at the same time, could reduce Stamp Duty Land Tax rates from 5% to the minimum 1%.
Under the new relief, the percentage rate charged will be based on the average price paid for each home in the transaction. It is not automatic but can be claimed by the purchaser.
For example if a detached house were bought for £510,000 and two flats at £119,000 each, the total transaction cost would be £748,000 with an average price per property of £249,333. This would then incur the 1% rate of Stamp Duty Land Tax on the whole amount (£7,480) as opposed to 4% on the £510,000 house (£20,400) a saving of £12,920 in the Stamp Duty Land Tax incurred by the transaction. Multiple Dwelling transfer SDLT relief
This benefits anyone buying a higher price new home, buy-
Stamp Duty Mitigation Schemes
There are several types of schemes available for companies purchasing property over
£500,000. Specialist solicitors can legally remove Stamp duty liability altogether
from property purchases of £250,001 or more. This is claimed to be a straightforward
and legitimate way to save a significant amount of money. However, tax consultants
can charge a fee of around half the SDLT plus vat and a solicitor will add around
£1000 plus vat to implement the scheme. Scheme providers often quote a 9-
External Link -
Stamp Duty & how to reduce it
Information and advice:
Considerations when buying a flat
Buying a new home in a recession
What you should know about timber frame
For example a house selling for :-
£126,000 will attract a 1% stamp duty of
£249,950 will attract a 1% stamp duty of
£250,001 will attract a 3% stamp duty of
£499,950 will attract a 3% stamp duty of
£500,001 will attract a 4% stamp duty of
£1,260.00
£2.499.50
£7,500.00
£14,998.50
£20,000.00
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Less than £125,000
£125,001 to £250,000
£250,001 to £500,000
Above £500,000
Above £1,000,000
Brief history of Stamp Duty
Stamp duty was first introduced in the UK in 1694 to pay for the war with France and was only intended for four years. However, it generated such high revenues for the government that it was never repealed. In 1984 the threshold for stamp duty on property was increased from £25,000 to £30,000 with the highest rate of stamp duty reduced from 2 per cent to 1 per cent. In the last property slump in 1991 the Conservative government temporarily suspended stamp duty for nine months on all properties worth less than £250,000 in an attempt to stimulate the housing market. In the financial year 2007/08 the Inland Revenue received £6.5 billion from residential stamp duty. Gordon Brown’s 2005 Budget increased the zero rate stamp duty threshold from £60,000 to £120,000 increasing it again in the next Budget to £125,000.
Try the Stamp Duty Calculator Stamp Duty Mitigation Schemes
Stamp duty rates Zero Carbon New Homes Exemption
Disadvantaged Area Relief Reduced rates for Multiple purchase
What is Stamp Duty Land Tax
SDLT is a property tax paid by purchasers. If the purchase price is £125,000 or less you don’t have to pay stamp duty. It is important to realise that unlike income tax rates, the stamp duty percentage rate is levied on the TOTAL purchase price of the property transaction, not just the proportion over each threshold. This will include all extras that are added to and included in the price. It may be a good idea to pay separately for optional extras if you can to avoid paying stamp duty on them. The amount of Stamp Duty payable varies in relation to the purchase price.
No Stamp Duty is currently payable on properties sold under £250,000 to FIRST TIME BUYERS before the 25th March 2012.