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What is stamp duty on property?

Stamp duty is a tax that people have to pay when they purchase property in the UK.

Its full title is ‘stamp duty land tax’ and it came into effect in December 2003, replacing the previous stamp duty that buyers were charged.

It consists of a percentage of the amount paid when buying houses, flats, land or other buildings. The property purchase prices are graded into bands.

You would pay no stamp duty on property costing less than £125,000.

On properties which cost from £125,000 up to £250,000, you would pay stamp duty of one per cent of the purchase price.

For £250,000 up to £500,000 the proportion rises to three per cent, while for properties costing from £500,000 up to £1 million, the stamp duty would be four per cent.

A new band was introduced in April 2011 for properties with a total purchase price of £1 million or more – in those cases the buyer has to pay five per cent stamp duty.

But to make things easier for first-time buyers, the threshold at which they start having to pay stamp duty land tax on property is currently much higher. They don’t have to pay unless the total purchase value comes to £250,000 or more, when they would be charged three per cent like everyone else. The subsequent, higher, tax bands would also apply.

However, this exemption only lasts until March 2012 and applies to people who have never owned or bought a home anywhere in the world, including the UK.

 

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