Stamp duty - the facts

Stamp duty is a tax payable by homebuyers. It is paid through solicitors upon completion and is a way of raising money for the government. Stamp duty is based on the purchase price of the property and is charged at the following rates: -

Property valued from £0 to £60,000   - No stamp duty

Property valued from £60,001 to £250,000  - 1 percent

Property valued from £250,001 to £500,000  - 3 percent

Property valued above £500,000    - 4 percent

The calculated stamp duty amount is rounded up to the nearest £5. No stamp duty is payable when selling a property or if you remortgage your house. If you don’t pay stamp duty when purchasing a house, the Land Registry won’t register ownership of the property.

A common way of reducing a stamp duty bill when buying your house is to negotiate a purchase price just below a threshold if this is possible. For example the duty on a house worth £245,000 is £2,450, but if you buy a house for £255,000 the duty shoots up to £7,650 – a difference of £5,200.

When you buy a property there is a clause on the conveyance where you - and your solicitor - certify that the deal does not form part of a larger transaction. So if you are deliberately undervaluing the price and paying the balance elsewhere to avoid stamp duty you are in law committing tax fraud. You could be liable for prosecution and your solicitor could also be found guilty of unprofessional conduct and may lose his permission to practice.

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