What is stamp duty and why do I have to pay it?
Stamp duty has been in the news quite a lot recently, so the Rightmove team have put together a brief explanation of what is and why buyers have to pay it.
Stamp duty is a lump-sum tax that anyone buying a property or land costing more than a certain amount must pay. The rate at which you’ll pay the tax varies depending on the price of the property and the type (i.e. residential or commercial).
In England and Northern Ireland buyers pay Stamp Duty Land Tax, in Scotland it’s called Land and Buildings Transaction Tax, while in Wales buyers pay Land Transaction Tax.
In England and Northern Ireland, the tax is on homes sold for £125,000 or more. However, first-time buyers pay no tax up to £300,000 and 5% on any portion between £300,000 and £500,000.
A first-time buyer is someone who’s never owned a property, whether bought or inherited, anywhere in the world. You also won’t count as a first-time buyer if you’re buying your first property with the intention to let it out.
Buyers have to pay stamp duty as it’s a levy charged by the government on the sale of a property.
The important thing to know is that, if you’re buying in England or Northern Ireland, you have 14 days from the date of completion (when all the contracts are signed and you get the keys) to pay stamp duty or transaction tax.
Your solicitor is likely sort this out and advise you to pay the bill straightaway, because if you take longer than two weeks, you could face a fine and possibly interest on top.
How do I actually pay stamp duty?
First, find your unique transaction reference number (UTRN). It’ll be 11 characters long and found on your submission receipt if you have filed online, or on your paper stamp duty return.
From here you can call up your bank, or go online, use HM Revenue & Customs’ bank details, and pay it. This normally takes three working days, so take this into account and don’t miss the deadline.
But if you don’t have these options available to you, you can pay by cheque in post office branches or post – although note that these latter options require you to present a payslip.
For more information on house-buying finances, visit our advice page here.