Stamp Duty

(see below for duty payable on leases)

Stamp Duty payable when buying real property in England, Wales and Northern Ireland

This is a short guide to the stamp duty payable when you buy a property. It does not cover all the points that can arise so if you need more information, you should contact a Stamp Office. This information does not apply if you are buying land or buildings in Scotland.

In his recent budget the chancellor announced that until 2012 all new zero carbon homes up to £500,000 will be exempt from stamp duty.

What are the Stamp Duty rates?
When to purchase price is:
Up to £125,000 the duty is 0% *(threshold £150,000 for non-residential property)
£125,001 to £250,000 the rate is 1%
£250,001 to £500,000 the rate is 3%.
Over £500,000 the rate is 4%.

When Is Stamp Duty Payable?
Stamp duty is payable if the price of the property you are buying is more than £125,000*. Stamp duty is payable on a purchase price of less than £125,000 only if the sale is part of a larger transaction or series of transactions. This is uncommon in most house sales and purchases. The normal chain of buyers and sellers is not regarded as a series of transactions for this purpose.

How is the Rate Of Duty applied?
The rate is expressed as a percentage figure which will be rounded up to the next £5. If you buy a property for a price between £125,001 and £250,000, duty is charged at 1% on the whole of the purchase price. For prices between £250,001 and £500,000 3% and for amounts in excess of £500,000, 4% will apply. The amount of duty you pay will depend upon the amount of the purchase price and whether the appropriate certificate of value is included in your document.

To qualify for the nil rate of duty ....
Where the purchase price is £125,000 or less and the sale is not part of a large transaction or series of transactions you will not need to pay stamp duty. You will need to insert a certificate of value in the Land Transfer or Conveyance document which says that the purchase is not part of a larger transaction or series of transactions, for which the total purchase price is more than £125,000. If the document does not include this statement, duty becomes payable.

To qualify for the rate of 1%
For a purchase price between £125,001 and £250,000, the rate of duty is 1%. A statement will need to be included, to say that the document is not part of a larger transaction or series of transactions, for which the total purchase price is more than £250,000.

To qualify for the rate of 3%
For a purchase price between £250,001 and £500,000, the rate of duty is 3%. The document must contain a statement to say that the total purchase price is not more than £500,000. No certificate of value is appropriate where the purchase price exceeds £500,000 and duty is payable at the rate of 4%.

N.B. If a document does not contain the appropriate certificate, duty becomes payable at the higher rate of 4%, regardless of the amount of the purchase price. These amounts are always rounded up to the next £5.

When Must The Duty Be Paid?
The Land Transfer or the Conveyance must be taken or sent to a Stamp Office within 30 days of the date on which it becomes effective. This is normally the date on the document. A penalty is payable if the document is taken or sent to a Stamp Office after this 30 day period. Interest will also be charged on any duty which is not paid within the 30 day time-limit. The value of the duty paid is normally stamped on the Land Registry Transfer if the property is registered land or the Conveyance if the property is unregistered.

Who Pays The Duty?
The purchaser rather than the seller usually pays the stamp duty. Solicitors or other agents are often engaged by the purchaser to act in the transaction. In that case they may charge the purchaser the stamp duty and then pay it to the Stamp Office on their behalf.

Do Other Forms Need To Be Completed?
Yes. Forms L(A)451 (15 S Northern Ireland) and Stamps 61. The form L(A)451 needs to be completed with particular details of your house purchase and sent to us with the transfer or conveyance. The Stamps 61 is an application for stamping form which should accompany the documents and duty sent to the Stamp Office and will help ensure your application is dealt with speedily.