Who pays stamp duty?

BUYING a home of course involves additional costs and can mean having to pay stamp duty.

But you don't always have to pay the tax and the thresholds vary depending on the value of the property.

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Stamp duty can be a tricky subject to get your head around, particularly after changes announced by the Government in 2022.

So we've put together a quick explainer on what the tax is, who pays it and how much it is depending on your circumstances.

Here's everything you need to know.

What is stamp duty?

Stamp duty is a payment you have to make when buying a property or piece of land over a certain price.

You pay the tax when you:

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

The rate you pay depends on the price and type of property and certain thresholds:

The current thresholds are:

• £250,000 for residential properties
• £425,000 for first-time buyers buying a residential property worth £625,000 or less
• £150,000 for non-residential land and properties

If you buy a property for less than these thresholds, you don't have to pay stamp duty.

You will pay stamp duty over these thresholds, but the amount varies depending on how far over them you go.

Who pays stamp duty right now?

It is home buyers who pay for stamp duty, not the seller.

In most cases, this is done through a solicitor on your behalf during the buying process.

As the home buyer, you have 14 days from the date of buying a property to file a Stamp Duty return to HMRC.

If you don't within this time frame you can be charged penalties and interest.

How much stamp duty will I pay?

Not everyone pays the same amount as it depends on the price of the property.

If you are a first-time buyer you can get a discount if the following applies to you: 

• You, and anyone else you’re buying with, are first-time buyers
• The purchase price is £625,000 or less

Those who aren't first-time buyers will pay different rates depending on the value of their new home:

• If it's up to £250,000 - no stamp duty is paid
• For the next £675,000 (the portion from £250,001 to £925,000) - stamp duty is charged at 5%
• For the next £575,000 (the portion from £925,001 to £1.5million) - stamp duty is charged at 10%
• For the remaining amount (the portion above £1.5million) - stamp duty is charged at 12%

As an example, if you are buying a second home and it's value is £300,000 you would pay stamp duty at a 5% rate on the £50,000 - £2,500.

If you want to work out quickly how much stamp duty you will pay on a property, you can use an online calculator.

Two useful ones are found on www.moneyhelper.org.uk and www.stampdutycalculator.org.uk.

You can also join our new Sun Money Facebook group to share stories and tips and engage with the consumer team and other group members.