Do you pay Stamp Duty on a new build?
Estimated reading time – 5 minutes
Stamp Duty for new build homes is similar to Stamp Duty for any home, whether it’s been built recently or not. Below we look at whether you’ll have to pay Stamp Duty if you’re purchasing a new build, how much you might have to pay, and whether the payment can be waived.
What is Stamp Duty?
Stamp Duty Land Tax is a tax paid on property or land bought in England and Northern Ireland. You’ll have to pay it if your purchase costs over a certain price. As of 23 September 2022, the government has introduced a change to stamp duty for both first time buyers and those moving house. The changes include 0% on the first £250,000. Previously this was 0% on the first £125k and 2% between £125,001 to £250,000. And for first time buyers you will pay no Stamp Duty up to £425,000. Previously this was set at £300,000.
Stamp Duty rates
From 23 September 2022, you’ll have to pay Stamp Duty on portions of the price of your home above £250,000. This means that you won’t be taxed on the first £250,000, but will have to pay Stamp Duty for anything beyond that price.
|Property value||Stamp Duty rate|
|Up to £250,000||0%||The next £675,000 (from £250,001 to £925,000)||5%|
|The next £575,000 (from £925,001 to £1.5 million)||10%|
|The rest of the amount (over £1.5 million)||12%|
The rules are slightly different if you’re a first-time buyer or if you’re buying a second home or buy to let property. There are also special rates for some other situations, such as:
- property purchased by corporate bodies
- if you’re purchasing six or more properties in one go
- shared ownership homes
- multiple purchases and transfers between the same seller and buyer
- residential property purchased by companies and trusts.
It’s important that you pay the Stamp Duty charges to prevent getting penalised. When you’re budgeting for a new home purchase, you’ll also want to consider other costs when buying a new home.
Stamp Duty penalties: will I get fined for not paying Stamp Duty?
There are two main types of penalties: on submissions and payment. If you have to pay Stamp Duty on your new home, you’ll need to get HM Revenue and Customs (HMRC) to stamp your documents. This needs to happen within 30 days of when they’re signed and dated. The penalty for late submissions is as follows:
|Lateness of submission||Penalty amount|
|Up to 12 months||10% of the duty charge (maximum of £300)|
|12- 24 months||20% of the duty charge|
|More than 24 months||30% of the duty charge|
If you’re late in paying your Stamp Duty fees, you’ll be charged interest on top of what you owe, unless the interest is less than £25. HMRC uses the interest rate set by HM Treasury to figure out how much you’ll owe.
Can Stamp Duty on my new house be waived?
There are circumstances where buyers could potentially get further relief or exemptions on Stamp Duty charges.
These include situations where:
- no money is exchanged for a land or property transfer
- property is left in a will
- property is transferred because of divorce or dissolution of a civil partnership
- you buy a freehold property for less than £40,000
- you buy a new or assigned lease of 7 years or more, as the premium is less than £40,000 and the annual rent is less than £1,000
- you buy a new or assigned lease of less than 7 years, as long as the amount you pay is less than the residential threshold or non-residential threshold of Stamp Duty
- you use alternative property financial arrangements
The government website has a full list of situations where you can waive Stamp Duty Land Tax.
If you’re planning on applying for a mortgage to buy a new build home, you may want to check your Equifax Credit Report & Score beforehand – it’s free for the first 30 days and then £14.95 monthly. The report shows you your borrowing history, while the score gives you an indication on how creditworthy a lender may think you are.
This article was written on 04 November 2022; all information was correct at the time of writing.
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