A Guide to Stamp Duty: Navigating Your Sale and Next Purchase
When you're selling your home, your focus is naturally on achieving the best possible price. But selling is just one half of your journey. Soon, you'll be stepping into the shoes of a buyer, and thatās when Stamp Duty Land Tax (SDLT) becomes an important part of your budget.
As your agent, we believe in preparing you for the entire move. Understanding SDLT helps you plan your finances and gives you a strategic advantage when negotiating with potential buyers.
Planning for Your Next Purchase: What Will You Owe?
Once you have an offer on your property, itās important to have a clear picture of the total cost of your next home. SDLT is paid by the purchaser, and the amount depends on the price of the property and your circumstances.
Standard SDLT Rates in England and Northern Ireland (Effective from 1 April 2025):
- Up to Ā£125,000: 0% SDLT
- Ā£125,001 to Ā£250,000 (the portion from Ā£125,001 to Ā£250,000): 2% SDLT
- Ā£250,001 to Ā£925,000 (the portion from Ā£250,001 to Ā£925,000): 5% SDLT
- Ā£925,001 to Ā£1.5 million (the portion from Ā£925,001 to Ā£1.5 million): 10% SDLT
- Above Ā£1.5 million (the portion above Ā£1.5 million): 12% SDLT
Higher Rate Surcharge
If you buy your new home before selling your current one (breaking the chain), youāll be classed as owning two properties. This means a 5% SDLT surcharge on top of the standard rates.
The good news is that if you sell your previous main residence within 36 months, you can usually claim a full refund for the extra amount paid. However, you will usually need the funds for this significant upfront cost, so itās vital to factor this into your financial planning.
First-Time Buyer Relief (for properties up to Ā£500,000)
- Ā£0 ā Ā£300,000: 0% SDLT
- Ā£300,001 ā Ā£500,000: 5% SDLT
- Above Ā£500,000: standard SDLT rates apply
Non-UK Resident Surcharge
From 1 April 2021, non-UK residents purchasing residential property in England and Northern Ireland will usually pay an additional 2% SDLT surcharge.
How Your Buyerās Position Can Influence Negotiations
While you wonāt pay your buyerās SDLT, their tax liability affects their budget and offer. Understanding their position gives valuable context when reviewing offers.
- First-Time Buyer: Pays 0% SDLT on the first Ā£300,000 (homes up to Ā£500,000). With a smaller tax bill, they may have more flexibility, potentially making a stronger offer.
- Standard Home Mover: Balances proceeds from their sale with the purchase price and SDLT. Their offer reflects all these costs.
- Investor or Second-Home Buyer: Pays the 5% higher rate SDLT surcharge, increasing costs and often making them more strategic in negotiations.
Knowing your buyer's status helps us assess the true strength of their offer. It allows us to distinguish between a buyer who is trying their luck with a low offer and one who is making a fair offer based on their total financial commitment.
Let Us Guide You Through the Entire Process
Navigating the complexities of selling one property while buying another can be challenging. At Allen Residential, we pride ourselves on providing expert guidance for every step of your journey. We help you understand the finances, assess your offers, and plan for a smooth and successful move.
Disclaimer: This blog post is for general information only. SDLT rates and rules are subject to change. This is not financial or legal advice. We strongly recommend seeking professional guidance to understand your specific tax obligations. Allen Residential is not responsible for decisions made based on this information.
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