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Stamp Duty

Stamp duty has hit the headlines again recently because there are changes afoot, particularly affecting additional homes, such as Buy to Let properties. There will also be new relief for home movers and downsizers. But what is Stamp duty? Well, its full name is Stamp Duty Land Tax, sometimes abbreviated to SDLT and it’s a tax you pay on any property you buy that’s of over a certain value. In April 2016, the tax will be changing and new rates will come in for second homes and buy-to-lets. Stamp duty is always paid by the person doing the buying, not the selling, and it isn’t applied to removable chattels and fixtures such as curtains or freestanding furniture. However, anything actually attached to the property, such as fitted kitchens and inbuilt wardrobes, does add to the tax.

Among the ways people have found to reduce their stamp duty costs is the tactic of vastly inflating the value of removable fixtures. These exaggerated prices are then deducted from the total price of the property in order to arrive at a lower stamp duty bill. However, HMRC has wised up to this strategy by asking sellers to justify and explain their calculations.

Some exceptions to the stamp duty rules include properties acquired by charitable organisations which can sometimes be exempted from the tax, and zero-carbon houses and flats which are either exempted or given discounted rates, depending on their overall value. Right to Buy purchasers may also sometimes find themselves in line for a discount whereas property registered to a company comes with a higher rate.

STLD is paid within the first 30 days of the date at which you have officially taken possession of your property. Even if you aren’t due to pay any of the duty, you are expected to complete a return form unless your property is less than £40,000 in value – somewhat unlikely in London. You will in all likelihood find that your conveyancer and/or solicitor will be involved in ensuring you don’t miss your deadline.