The biggest disbursement payments in home buying deals are the charges of stamp duty and land registry. Such payments are to be dealt with special care. Buyers should always hire reliable conveyancing solicitors for the purpose of home buying. If you hire an inexperienced solicitor, your case may go into complication and the worst thing that can happen, you might lose a large sum of money. Professional solicitor home convey services will protect you from this nightmare. Before we further explain the importance of Stamp Duty and Land registry, first time buyer should know the definition of each of these terms.
Stamp Duty or SDLT (Stamp duty Land Tax)
It is the tax for the land that buyer needs to pay to the government; the tax amount depends upon the value of the property. In most of the cases, SDLT applies to the properties with their value increase for than £125000 otherwise properties that are valued less than £125000 will not be subjected to any tax as defined by the state.
Land Registry is also a percentage cost based upon the value of the property. In order to transfer the land registry title to the name of the buyer, state require the buyer to pay to the government a percentage value of the land that the buyer bought from the previous owner of the property otherwise the land will not be registered in the name of the new owner of the house.
Stamp Duty or SDLT
Stamp duty tax applies to the properties with value more than £125000. A little understanding of the cost of stamp duty is outlined below:
Property purchase price vs Percentage Stamp Duty
- If the property purchase price ranges from £0 to £125000 then there will be no tax payment
- For £125000 to £250000 : 2% stamp duty
- For £250,001 – £925,000: 5% stamp duty
- For £925,001 – £1.5 million: 10% stamp duty
For small home or property buyers, government has released the duty, as there will be no tax on the house with a price less than £125000; however, people who want a better house to live in must know if they can afford to pay the stamp duty for the land that price more than £125000.
What is included in Stamp Duty?
SDLT for straight cash exchange for the land might not include complex “chargeable consideration”, however, if you are buying a house along with the household good, appliances, and other things attached to the house building, then you will also be paying a tax in exchange of those goods.
Chargeable consideration applies to the assets that are attached or part of the land such as:
- Building or structure of the house
- Fittings in the building, i.e. kitchen fittings, bathroom fitting etc.
- The value of the goodwill attach to the land.
Moveable furniture and other tools, accessories, etc. are not included in the part of chargeable consideration.
When the buyer agrees with the vendor to pay the remaining price on a future date; in such cases postponed consideration are applied to the contract. Consider, for example, a buyer agrees to pay 70% price of the house in an agreed date, 30% price after the deal is closed with seller, in such cases, SDLT will apply on both the previous price, and the future price paid in a property transaction.
An amount that buyer payment only on the outcome of “future events”; SDLT applied in such deals is commonly known as “contingent consideration”. For example, a builder buys a land with a cost of £400000 and a future cost of £200000 only if he/she gets the permission for the construction of the building. Therefore, the initial payment because of the future event will exceed the £500000 and he/she have to pay 4% SDLT on the initial payment of the land.
Stamp duty land tax is a very important part of the house purchase. If buyers have to own a house, they have to give credit on their part to the UK government to enjoy the facilities paid to the citizens in exchange of the tax they pay for their land. To avoid any pitfall during home convey transaction people should always hire a reliable solicitor. To get the best services of home buying in UK, people can visit NBM Law group of solicitor. For more information you can also visit their website at Conveyancing Chelmsford.