Author: Mike Steele
Stamp Duty, or Stamp Duty Land Tax as it is now known, is a tax levied by the government on certain land and property transactions.
Stamp Duty has its origins all the way back in 1694 when the tax was originally introduced as a means of paying for the war against France and although it was set up as a temporary measure, the tax is still with us today.
Where does the name come from?
The name Stamp Duty comes from the time when legal documents that created a Stamp Duty liability were literally stamped with the amount of tax that had been paid. If you have any of the old deeds to your property, it is likely that you will be able to see the Stamp Duty stamps bearing the monarch’s head on them. Although this does not happen any longer as most Stamp Duty payments are dealt with electronically, the name still remains.
April 2016 saw some of the biggest changes to the rules on Stamp Duty in recent times. In a property purchase transaction, there was generally no tax payable on any properties under the value of £125,000. Where someone is buying their first home or selling and replacing the property they live in, this remains the case for the majority of buyers.
However, the 2016 rules mean that where someone is buying additional property, such as a buy to let property or second home Stamp Duty is potentially payable at higher rates for properties over the value of £40,000. The rules also treat married couples and civil partners as a single unit, so if one partner does not own any property and wishes to buy property in their sole name, they may be liable to pay Stamp Duty at higher rates if their spouse owns property in their sole name. The higher rates also apply to property purchased by companies, irrespective of whether the company already owns property. It is possible in certain limited circumstances to apply for a refund of higher rate Stamp Duty paid by a buyer.
The higher rates of tax really can make a difference of thousands of pounds to the amount payable by a buyer.
The government has produced a Stamp Duty calculator that can be used to calculate the amount of tax payable on a property purchase at the current rates.
Other property transactions
Stamp Duty can also be payable on other property transactions, such as transfers of equity, so proper consideration needs to be given to any potential tax implications with all property transactions.
If you are concerned about the potential Stamp Duty for your proposed property transaction, why not give our friendly team a call for advice and a no obligation quote.