young couple talking about Stamp DutyBy John Cossons, Cert CII (MP & ER) Mortgage Adviser

What is Stamp Duty and do I need to pay it?

Firstly, you must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.

The tax is different if the property or land is in Scotland where you pay Land and Building Transaction Tax and in Wales where you pay Land Transaction Tax. I am going to look at the tax payable in England and Northern Ireland only.

You pay the tax when you:

  • buy a freehold property.
  • purchase a new or existing leasehold.
  • buy a property through a shared ownership scheme.
  • are transferred land or property in exchange for payment, for example, you take on a mortgage or buy a share in a house.

What are Thresholds?

logo for help with Stamp DutyThe threshold is where SDLT starts to apply. If you buy a property for less than the threshold, there is no SDLT to pay.

The current SDLT threshold for residential properties is £500,000 due to the temporary stamp duty holiday. This changes on 1 July 2021.

The threshold for non-residential land and properties is £150,000.

Property purchases from 1 July 2021 to 30 September 2021

The SDLT thresholds will be:

  • £250,000 for residential properties
  • £150,000 for non-residential land and properties

The threshold for residential properties will change on 1 October 2021.

Property purchases from 1 October 2021

The SDLT thresholds will be:

  • £125,000 for residential properties
  • £150,000 for non-residential land and properties

These thresholds are the same as they were before 8 July 2020.

First-time buyers

Currently, there is no additional benefit for first-time buyers as the stamp duty holiday applies to anyone.

From 1 July 2021, you will get a discount (relief) that means you’ll pay less or no tax if both the following apply:

  • you, and anyone else you are buying with, are first-time buyers. (For joint purchases you must all be first time buyers to benefit)
  • the purchase price is £500,000 or less. (If you are buying over this price you will receive no discount on any part of the property)

How much Stamp Duty will you pay?

If you are buying your first home

PFS logo for mortgage helpYou could claim a discount (relief) if you bought your first home before 8 July 2020 or from 1 July 2021. This means you will pay:

  • no SDLT up to £300,000
  • 5% SDLT on the portion from £300,001 to £500,000 (If you are buying for more than £500,000 there is no discount, and the standard rates apply to the whole price)

New leasehold sales and transfers

When you buy a new residential leasehold property, you pay SDLT on the purchase price of the lease (the ‘lease premium’) using the rates above.

If the total rent over the life of the lease (known as the ‘net present value’) is more than the SDLT threshold, you will pay SDLT at 1% on the portion of net present value over:

  • £500,000 for purchases from 8 July 2020 to 30 June 2021
  • £250,000 for purchases from 1 July 2021 to 30 September 2021
  • £125,000 for purchases from 1 October 2021

This does not apply to existing (‘assigned’) leases.

You can work out how much SDLT you will pay for your new residential lease using these links to the HMRC’s website-

How Anstee & Co. can help you buy your first home.

We are a firm of independent mortgage advisers. This means that the financial advice we provided is unbiased. We will look at all the options available to you from the “whole of market”. This is unlike some mortgage advisers who will only recommend their own products or work from a limited panel of mortgage providers.

You can visit our website, designed for “first-time buyers”, for more detailed information and tools to help your find the best mortgage for you.

The initial “getting to know you” meeting is at our expense and is without obligation so why not arrange a meeting today?

call back logo for help with Stamp DutyWe have offices located at-

  • Kettering, Northamptonshire
  • Stamford, Lincolnshire
  • Towcester, Northamptonshire
  • London, Greater London

Due to the present government guidelines regarding COVID-19 (coronavirus) and social distancing rules we are making full use of video conferencing facilities such as –

  • Zoom
  • Microsoft Teams
  • Facetime
  • Skype

We can also arrange a conference call. The choice is yours. There is no need to visit an office as all work can be handled remotely. So, the meeting can be arranged at a time that is convenient to you.

If you have any thoughts on this article, “Stamp Duty and the First Time Buyer”, then we would love to hear from you.

Financial Conduct AuthorityFinally, the information contained in this article is for information purposes only and does not constitute advice. Anstee & Co. is authorised and regulated by the Financial Conduct Authority (FCA).

AS A MORTGAGE IS SECURED AGAINST YOUR HOME, IT COULD BE REPOSSESSED IF YOU DO NOT KEEP UP THE MORTGAGE REPAYMENTS.