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Stamp Duty

Stamp Duty

SDLT, or Stamp Duty Land Tax to give it its full name, is a lump sum tax paid by anyone buying property (or land for that matter).

Changes were announced in the Chancellors Autumn Statement back in 2014 which were for the better overall.  In fact for most, significant savings were generated.

Do not forget that upon disposal of your property, purchase costs including stamp duty can be offset to mitigate your CGT liability

Under the old system, you’d pay 1% on property from £125,000 to £250,000.  And from £250,001 to £500,000 you’d pay 3%, but on the whole amount, so purchasing a property at £250,000 would be £2500 stamp duty, but a £275,000 acquisition would result in a jump to £8250!

Anyway, the newer bandings are more levelled and in truth are considerably better unless you are buying property at the particularly wealthy end of the market.

The current bandings are:

  • 0% below £125,000
  • 2% on the amount above £125,000 and upto £250,000 only
  • And you pay 5% on any portion above £250,000

So carrying forward the previous example; a purchase at £275,000, would only attract a bill of £3750 (as opposed to £8250 previously)

  • 0% below £125,000
  • 2% on the amount above £125,000 and upto £250,000 only
  • And you pay 5% on any portion above £250,000

So carrying forward the previous example; a purchase at £275,000, would only attract a bill of £3750 (as opposed to £8250 previously)

Purchase Price

Stamp Duty Rate

(on that portion of the purchase price)

Up to £125,0000%
£125,000.01 – £250,0002%
£250,000.01 – £925,0005%
£925,000.01 – £1,500,00010%
£1,500,000.01 +12%

Changes in April 2016 for landlords & second home purchasers

The Chancellor has introduced a 3% Stamp Duty Surcharge on Buy to Lets and second homes.  For clarity this is in addition to the above current bandings and is on any purchase over £40,000 in value.

It was initially proposed in 2015 that companies owning 15 or more properties would be exempt from the surcharge – however in George Osborne’s March 2016 budget, this was repealed and is not the case – the surcharges are to be paid by companies of any size.

Do not forget that upon sale of your property, purchase costs including stamp duty can be offset to mitigate your CGT liability.

Coupled with changes to personal taxation being phased in over the coming 4 years – Limited Company Mortgages are becoming more popular than ever before.

See here for further info on borrowing via your Limited Company

Talk to your solicitor or a property tax expert for specific advice you can rely upon.

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