Stamp Duty

Quick Summary of Stamp Duty

Stamp duty is a tax that is levied on single property purchases or documents. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty had been paid before the document was legally effective. More modern versions of the tax no longer require an actual stamp.

A stamp duty broadly refers to any tax a government entity levies on documents. The United States and Commonwealth of Nations countries such as Australia and Singapore are the most common users of the stamp duty. Documents used to require the application of a physical stamp to prove the stamp duty had been paid, but in the present day, an actual stamp is typically no longer required as proof of payment. Checks, land purchases and sales, marriage licenses, and military commissions have historically been subjected to stamp duty. The federal government used to assess a stamp duty on assorted transactional documents, but today the stamp duty for these are imposed by state governments. For instance, the deed to a house may be assessed a stamp duty before it is transferred from seller to buyer. Mortgages and other property-related instruments of finance may also be subject to stamp duty, payable at the time of registration.

Stamp Duty (Stamp Duty Land Tax) is a tax on transactions, not documents. For transactions in land and buildings in the UK, completed on or after 1st December 2003 you are not required to send in documents for stamping.

You or your agent (usually your solicitor) should complete and send in a land transaction return to the Inland Revenue. You also face automatic penalties if there is a delay of more than 30 days in paying the Duty.

The land transaction return is required to notify the following:

• any transfer of a freehold or assignment or assignation of a lease for
• consideration, whether or not giving rise to a charge
• any transaction for which relief is being claimed
• the grant of a lease for a contractual term of 7 years or more or which
• gives rise to a charge
• any other transaction giving rise to a charge

It is worth bearing in mind that even if your purchase is below the Duty threshold a land transaction return will still need to be completed for these transactions. The 0% upper threshold is £175,000 for residential transactions and £150,000 for non-residential deals.

In return, you receive a stamp duty land tax certificate which you or your agents submit to land registries in order to register ownership of land or to record a deed, as appropriate.

The upper threshold rate was increased from £125,000 in September 2008. After September 3 2009, it reverted back to £125,000.

Stamp duty is not payable on remortgages.

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