The majority of people in the UK buying a new home will be required to pay stamp duty on the purchase. What is stamp duty, how is it calculated and what impact does it have on the UK housing market?
What is Stamp Duty?
The origins of stamp duty go all the way back to 1694 when it was brought in to pay for the war against France. Stamp duty is actually the oldest tax administered by the Inland Revenue. The current Stamp Duty Land Tax was introduced in 2003. Stamp duty covers purchases of all types of property and is paid by the buyer. The actual amount paid varies according to the value of the property being bought.
How is Stamp Duty calculated?
Stamp duty is levied at a percentage of the value of the property. For properties costing between £125,000 and £250,000 a 1% rate of tax is charged. For example if the purchase price of a property is £200,000 the buyer will be required to pay £2000 in stamp duty. For properties sold for between £250,000 and £500,000 stamp duty is set at 3% with a 4% rate for all properties costing over half a million pounds.
Are there any exemptions to Stamp Duty?
In an attempt to assist first time buyers and to account for rising property prices the lower boundary for stamp duty has increased twice in the last decade. Currently people paying less than £125,000 for a property will not be required to pay stamp duty. There are also exemptions for some properties being bought in areas that the Government considers to be disadvantaged.
How does Stamp Duty affect the UK property market?
As property prices have increased so has the amount that UK home buyers are paying in stamp duty. In the last year the average stamp duty paid was £4,950. The comparable figure for ten years ago was just over £700 which means that average stamp duty payments have increased by nearly 600% in the last decade. There is some concern that the rising cost of stamp duty is having a negative effect on the UK housing market. This concern has been acknowledge by the government who have recently announced a one year 'break' on stamp duty payments for all property costing less than £150,000.
What is Stamp Duty?
The origins of stamp duty go all the way back to 1694 when it was brought in to pay for the war against France. Stamp duty is actually the oldest tax administered by the Inland Revenue. The current Stamp Duty Land Tax was introduced in 2003. Stamp duty covers purchases of all types of property and is paid by the buyer. The actual amount paid varies according to the value of the property being bought.
How is Stamp Duty calculated?
Stamp duty is levied at a percentage of the value of the property. For properties costing between £125,000 and £250,000 a 1% rate of tax is charged. For example if the purchase price of a property is £200,000 the buyer will be required to pay £2000 in stamp duty. For properties sold for between £250,000 and £500,000 stamp duty is set at 3% with a 4% rate for all properties costing over half a million pounds.
Are there any exemptions to Stamp Duty?
In an attempt to assist first time buyers and to account for rising property prices the lower boundary for stamp duty has increased twice in the last decade. Currently people paying less than £125,000 for a property will not be required to pay stamp duty. There are also exemptions for some properties being bought in areas that the Government considers to be disadvantaged.
How does Stamp Duty affect the UK property market?
As property prices have increased so has the amount that UK home buyers are paying in stamp duty. In the last year the average stamp duty paid was £4,950. The comparable figure for ten years ago was just over £700 which means that average stamp duty payments have increased by nearly 600% in the last decade. There is some concern that the rising cost of stamp duty is having a negative effect on the UK housing market. This concern has been acknowledge by the government who have recently announced a one year 'break' on stamp duty payments for all property costing less than £150,000.