When buying a home or land in the UK, depending on the purchase price and your personal circumstances, the likelihood is that you’ll have to pay Stamp Duty Land Tax (SDLT).
SDLT often looks and sounds like a simple enough calculation, but it’s prone to error due to how often the rules change and how many individual circumstances can affect how much someone has to pay.
To be sure you’re paying the correct amount, you should always seek the advice of an SDLT professional. They will be able to advise on how much you’re liable for, as well as check if you’ve overpaid in the past.
Here is a closer look at the importance of working with an SDLT professional when buying a home or property in the UK:
Despite SDLT looking fairly straightforward to calculate, it’s estimated that as many as one in five homebuyers may have overpaid on their SDLT return at some point.
This is because the laws regarding stamp duty are always changing. In fact, SDLT laws have been subject to more changes in recent years than any other form of tax.
Therefore, it’s all too common for someone to pay too much, or even too little if they bought their home during a period where the government was rolling out changes to SDLT rates.
This is why it’s always important that you consult with an SDLT expert when buying a home. They will use the latest stamp duty calculator and also have the expertise to keep on top of the latest SDLT rates.
If you think you’ve overpaid Stamp Duty in the past, the first thing you need to do is have your tax checked by a tax advisor specialising in SDLT.
If they confirm that you have overpaid, you can put in a request with the HMRC for a SDLT refund. The tax advisor you’re working with should be able to help you obtain the correct forms and explain how you can request a refund.
If you’re unsure of the current SDLT rates for home purchases in England, the current stamp duty rates are as follows:
Purchase price Rate for main residence Rate for additional properties
Up to £500,000 0% 3%
£500,000-£925,000 5% 8%
£925,001-£1,500,000 10% 13%
£1,500,001+ 12% 15%
The reason why SDLT is currently 0% up to £500,000 is because we’re still in a “Stamp Duty Tax Holiday” until June 30th.
In July 2020 the government introduced a tax holiday on the lowest bracket of SDLT. The old rate used to start at 2% for a purchase value of £125,001-£250,000, then move up to 5% for the value between £250,001-£925,000.
With the pandemic having such a drastic impact on the housing market, the government increased the 0% band from up from £125,000 to £500,000.
The tax holiday as it’s called was first scheduled to last until 31st March 2021. This has since been extended to the 30th June 2021. The threshold will then drop to £250,000 until 30th September, before finally returning to pre-holiday levels on October 1st 2021.
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