With house prices rising rapidly more and more homebuyers are having to pay the dreaded stamp duty tax - and many are forced to pay a higher rate.
This guide explains why stamp duty is one of Britain's worst taxes, when and how you'll have to pay it and how much this dreaded tax will set you back.
Stamp Duty Calculator How much will I have to pay?
What is stamp duty?
Stamp duty land tax - to give it its full name - is a lump-sum tax that anyone buying a property or land costing more than a set amount has to pay. The rate you'll pay the tax at varies based on the price of the property and the type (we'll focus on residential, rather than commercial, buildings).
What rate will I have to pay?
As the price you pay for a new property increases, so do the rates of stamp duty. You pay a percentage of the cost, and the rate payable leaps up at a set of thresholds.
What stamp duty rate will I pay?
Stamp duty rate
|Up to £125,000||
|£125,000.01 - £250,000||
|£250,000.01 - £500,000||
|£500,000.01 - £1,000,000||
|£1,000,000.01 - £2,000,000||
|Correct at June 2014|
How do I pay stamp duty?
The crucial thing to know is that you have 30 days from the date of completion (when all the contracts are signed and dated - read our Timeline Buying a Home guide for full timeline) to pay your stamp duty bill. Take longer and you could face a fine and possibly interest on top, so don't!
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Can I add stamp duty to my mortgage?
The simple answer here is that it's best that you don't, but many people find that they have to.
To add the cost of stamp duty to your loan is a case of borrowing more when the mortgage is taken out. So, say you needed a £180,000 mortgage to purchase a house costing £300,000, but wanted to add the stamp duty, you'd need to request borrowing of £189,000.
Is it the same all across the UK?
For once, yes! The same arrangements and rates apply for homebuyers in England, Wales, Scotland and Northern Ireland.
However, Scotland will shake up its stamp duty charges from April 2015. This'll mean that people spending £324,000 or less on a home will pay less than under the current system, and those spending more will pay more.