Land Tax / Stamp Duty Holiday

When do pay Stamp Duty?

When do pay Stamp Duty?

All property in the UK is subject to a land tax which normally paid by your solicitor once the completion has occurred and Land Registry has been notified.

How much you pay in Stamp Duty is all dependent on how you buy the property and whether your buying as an individual in England and Northern Ireland ( Scotland and Wales have their own rules). At the moment, and up until the 31st March 2021, the Government has removed Stamp Duty Land Tax for any purchase that is below £500,000, if your buying as your first and only residential property.

However if your buying under the name of a company ( we will cover why you would so later) then there is an additional 3% to pay as well as if your buying as a second property personally.

The temporary discount has been designed to ignite the property market after the recent closures due to COVID-19. The rates above this vary, and you can calculate these using  a Stamp Duty Calculator under our Resources section. There are some reasons, where a property is uninhabitable where there could reduced Stamp Duty or where it is a commercial premise, these rates are generally lower.

With commercial stamp duty, one element that you need to consider is if your buying with VAT on the building as you will pay stamp duty on the VAT as well.

Why would buy a residential property under the of a company?

You would buy under the name of a company if you were looking to rent as a buy to let, and obtain a mortgage, as at present you cannot claim the interest back as an individual, only as a company. This reduces your return on investment; however, although this brings additional costs as you would pay additional accountancy fees and dependent on your allowances, this could be longer-term issues of tax payments.

Previously when first announced obtaining a mortgage on a company was difficult however this has not become much easier as the banks understand the reasons why this does negate from you having to give a personal guarantee though which can have implications on your personal finances if they mortgage is not paid, and there is not sufficient equity to cover the mortgage.

NOTES:

In Scotland, no land tax is due on residential properties costing up to £250,000, but a 4% supplement applies to the entire purchase price where the property is acquired as a second home or by a company.

In Wales, the land tax for residential properties starts at £250,001. However, a lower starting threshold of £180,000 applies when buying a second home, and a 3% supplement applies on the entire purchase price.

Calculate your stamp duty here