What is stamp duty?

What is stamp duty?
If you are seeking to buy a property, you must pay Stamp Duty Land Tax (SDLT). If you purchase a property over a specific price in England, Wales and Northern Island, you are expected to pay this tax. There is a certain threshold of £125,000 for residential properties and for non-residential properties or land it is currently at £150,000.
To be able to identify if you are liable within this Stamp Duty tax bracket, you pay for this tax when you:

·      You buy a freehold property

·      Purchase an existing or new leasehold

·      Potentially purchase a property through a shared ownership scheme

·      Exchange land or property for payment

Is there a price to pay for an additional home?

Owning your first home is a crucial and is potentially becoming a costly step. As of 1st April, there was a 3% surcharge on additional homes. There is also a charge at a higher rate if the property you choose to buy replaces your main home, but the residence has not been sold yet. However, one can apply for a refund if the previous property is bought within 36 months. Although this change massively impacts many landlords, it is apparent that many other people will also be affected greatly by the increase of stamp duty. For example, this could be detrimental to a parent with a child buying a home, unless the property is only bought in the name of the child. Couples may find themselves as a product of this expensive change if they choose to own a home in one partner’s name and the other partner buys another residence. Landlords should be aware that they could not avoid this new charge by setting up a limited company, as individuals who own companies will not be exempt from the Stamp Duty.

What does this mean for landlords?

 The Telegraph released an article regarding the impact on landlords. Many landlords are setting up new companies to avoid taxes driven by the 3% stamp duty on their income from renting. However, HMRC has ran a Let Property Campaign with the aim to offer the best possible strategies to landlords that are letting properties in the UK or overseas who have outstanding taxes.

In order to find the most effective and beneficial strategies for you, specifically landlords, accountancy firms can help manage your property portfolio. This is an essential move as HMRC are very thorough is catching landlords with non- declared rental incomes. Therefore, to provide the best outcome, an accountancy firm will direct their expertise in producing a tailored plan for your ‘buy-to-let’ property portfolio. This will generate sound advice, minimise liabilities and ‘ensure compliance with regulatory requirements.’

Be sure to get in touch for more advice if you are a landlord. Email us on This email address is being protected from spambots. You need JavaScript enabled to view it. or give us a call on 0115 956 9452.
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