Stamp duty is a form of taxation levied by HM Inland Revenue.
It is payable by a purchaser not a seller of land or property and the taxable element applies on sums greater than 125,000 pounds and the taxable percentage and the band slices of tax increase from there. Over the years the basis of applications have changed and it has been played around with frequently. For instance the tax originally was exempt to first time buyers up to 250,000 pounds.
It’s an unfair tax in our view but a huge revenue earner for the government. It is difficult enough for buyers, especially first time ones to find the required deposits these days, especially made more difficult because banks and mortgage lenders have not been as generous with their loan to value ratios of late. Gone are the days when only a 5% deposit was required with most lenders looking for a minimum deposit payable of 20% these days.
Take the example of a first time buyer transacting for buying a property at 300,000 as an example.
Tax would be payable at 2% on the first slice exceeding 125k and up to 250k and at 5% on the slice between 250k and 300k so 2% x 125,000 + 5% x 25,000 = SDLT payable of £3,750.
That’s a sizeable amount to pay and when you consider that legal costs of conveyancing will probably amount to a similar amount it’s the price of a nice kitchen.
Very unfair and crippling if you also have to save up for a 20% deposit of 60k. Stamp duty is an unfair tax.
So what do you do if you don’t have a high flying job, are saddled with a large student debt and are paying £1,000 a month in rent? I suppose the answer is that you live as cheaply as possible for a few years by moving back home with your parents and live like a month or you accept that, alike most of the younger debt-laden youth, that you will never be able to afford to own a property and will always be renting instead.
Then you are at the mercy of greedy landlords who will increase the rent as often as they can and put you onto a short term tenancy with limited rights at their first convenience. It’s a precarious and uncertain future for sure.
There’s no way to get out of paying SDLT and any loopholes that used to exist to aid you from evading the tax have been well and truly blocked up now. Your solicitor or licensed conveyancer will fill in the necessary declaration form and effect payment of the tax when you complete the conveyancing closure formalities.
There are permutations applicable to non-domestic and leasehold properties where the rates will differ plus there are different but similar schemes applicable in Scotland but generally the working calculation methods and application basis are the same plus it’s viewed by some as grossly umnfair whatever part of the UK you live in.