Everyone is looking for ways to cut expenses and manage their finances better. In an effort to save, we tend to limit spending to things that are absolutely important. In the UK, owning a house is a big commitment and with it comes some financial obligation in the form of Stamp duty.
Stamp Duty goes a long way back into the history of England. It is simply regarded as a tax paid on property and land purchases in the UK, paid at different rates and named differently depending on the part of the UK that your prospective property is located.
There are quite a number of factors that affect the rate of stamp duty you will be required to pay, these factors include;
Cost of the house
Did you just heave a sigh of relief, hoping to just work your budget to the price that escapes high stamp duty rate? Well, there is even better news which is that you have to purchase a property within a particular price range to be charged stamp duty.
The stamp duty rates vary from one region to another in the United Kingdom. For instance, in England or Northern Ireland, stamp duty is charged on land or property that is higher than £125,000, while in Scotland, the charges only apply for houses higher than £145,000 and in Wales, the standard is for houses above £180,000.
The cost of the house when above the named prices would also affect the rate of stamp duty as a particular amount usually attracts a specific percentage rate. For instance, in England and North Ireland, 2% is the rate of stamp duty charged on properties that cost between £125,000 and £250,000. The progression continues and differs based on cost and region.
First Time Buyers
If you are a first-time house buyer and intending to purchase a house which costs less than £300,000, then you can bid your farewell to stamp duty. First-time owners need not worry about stamp duty especially at this price range. However, if you exceed this price range, and it is less than £500,000, you will be charged 5% of the cost of your house which is still based on the first time buyer benefit. This is only applicable in England and Northern Ireland. In Scotland and Wales, there is no exemption of first-time buyers from stamp duty rates.
For properties over £500,000, the first time buyer benefit that excludes or reduced stamp duty does not apply.
Time to pay Stamp Duty
Ideally, there is a time frame of 30 days within the purchase of a property. The payment is often guided by your solicitor who helps with the paperwork of your house.
Basically, Stamp duty is backed up by the law and applicable in all parts of the United Kingdom asides little exemptions of which some have been stated here. Whatever the case may be, make sure you communicate properly with your agent as regards the details of your stamp duty rate.
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