For those of you who are not UK residents, it is important to be aware of the stamp duty rates and how they may apply to you when purchasing property in England or Wales. In this article, we will provide a comprehensive overview of stamp duty for non-UK residents, including what constitutes a taxable transaction and how much tax you can expect to pay. We will also discuss some common exemptions from stamp duty and ways to reduce your bill. So whether you are thinking of buying a property in the near future or are just curious about this tax, read on for more information.

What is Stamp Duty?

Stamp duty is a tax that is levied on certain legal documents in the United Kingdom. The most common type of stamp duty is charged on property transactions, such as when you buy a house or land. This tax is usually paid by the buyer, but there are some circumstances in which the seller may be liable.

Calculation of Stamp Duty

The amount of stamp duty you will pay depends on several factors, including the value of the property, whether it is your main residence and whether you are a first-time buyer. In England and Wales, rates are currently as follows:

  • Properties worth up to £125,000: 0%
  • Properties worth between £125,001 and £250,000: 0% on the first £125,000 and then 0% on the remaining amount
  • Properties worth between £250,001 and £925,000: 0% on the first £250,000 and then 20% on the remaining amount
  • Properties worth between £925,001 and £150,500: 0% on the first £250,000; 20% on the next portion up to£925,000; 40% on anything above that
  • Properties worth more than £150,500: 45%.

Less Than Market Value or Inherited Property

If you are buying a property for less than market value or inheriting a property from a family member who has died, you may be eligible for reduced rates of stamp duty. There are also certain types of properties that are exempt from stamp duty altogether, such as caravans and mobile homes.

Joint Bought Property

If you are buying a property jointly with another person, each of you will need to pay the relevant amount of stamp duty based on your respective share of ownership. So, for example, if you are buying a property worth £300,000 with someone else and you will own 60% of it, you will need to pay £120,000 in stamp duty (0% on the first £250,000 plus 40% on the remaining £50,000).

Stamp Duty Applies to Other Legal Documents

As well as being charged on property transactions, stamp duty can also apply to other legal documents such as shares and life insurance policies. The rates for these vary depending on the type of document and its value.

Scotland

If you are buying a property in Scotland, the rules for stamp duty are different. The tax is called Land and Buildings Transaction Tax (LBTT) and is calculated using a different system to the one used in England and Wales.

Who Pays Stamp Duty?

As we mentioned earlier, stamp duty is usually paid by the buyer when they purchase a property. However, there are some circumstances in which the seller may be liable for the tax instead. This includes cases where:

  • The buyer fails to pay the stamp duty within the required time period
  • The property is sold for less than its market value
  • The property is inherited by the buyer

When is Stamp Duty Payable?

Stamp duty must be paid within 14 days of completion if you are buying a property in England or Wales. If you are buying a property jointly with another person, each of you will need to pay your share of the stamp duty within this time period.

Interest and Penalties

If you fail to pay stamp duty on time, you will be liable for interest and penalties. The amount of interest you will owe depends on how much stamp duty you owe and when it is paid. For example, if you owe £500 in stamp duty and pay it one month late, you will owe an additional £50 in interest. Penalties for late payment of stamp duty can be either civil or criminal. Civil penalties are issued by HM Revenue and Customs (HMRC) and are usually a percentage of the tax owed, with a minimum penalty of £100. Criminal penalties can only be issued by the courts and may result in a fine or even a prison sentence. However, it should be noted that criminal prosecutions for failure to pay stamp duty are very rare and usually only occur in cases of serious tax evasion.