The Taylor&Emmet Blog

Stamp duty and the new rules for filing a return…

GET IT RIGHT FIRST TIME: Sarah is here to help first time buyers get to grips with the conveyancing process. This month, she discusses stamp duty and the new rules for filing a return…

My solicitor says there is no stamp duty to pay on the house I am buying, but I still have to submit a return.

Why is this?

Stamp duty is a tax applicable in England and Northern Ireland and is payable on most land or property transactions, or by tenants taking on or renewing a lease.

There are different rates and reliefs available, but it normally applies to all residential homes worth £125,000 or more.

In 2017, first time buyers’ relief was introduced, which means you pay no stamp duty on purchases of up to £300,000 and a reduced rate of 5% on the amount payable between £300,000 and £500,000, provided the total price does not exceed this figure. However, you are still required to submit a return, which your solicitor will do on your behalf.

Different rules apply if you are buying a second home or buy-to-let property and you can also gain relief if you purchase more than six houses in one transaction. In all of these cases, I would recommend discussing the stamp duty implications with your solicitor as early as possible.

How long do I have to submit the stamp duty return?

Any stamp duty owed will be paid by your solicitor on completion of your purchase. This has always been the way and historically, we had 30 days in which to do so.

Earlier this year, HMRC reduced the time period for filing stamp duty returns and they must now be received in 14 days. This applies to all property and land purchases completed after March 1. The government announced the change in its 2015 autumn statement, claiming it will increase efficiency, as well as reducing the compliance burden and costs for HMRC and customers.

Unfortunately, stamp duty has to be paid as a lump sum, not in instalments. If there is no payment to make, as is the case for you, a return still needs to be submitted within the new timeframe or you will receive a late filing penalty. It is worth noting the 14-day period includes weekends and bank holidays.

What penalty am I likely to incur if my solicitor files a late return?

There are automatic fixed penalties for late filing, depending on when the return is submitted and the stamp duty was paid. They are:
• Up to three months after the deadline – £100
• More than three months after the deadline – £200
• If the stamp duty itself is paid late, it will be charged up until the date the payment is received.

There is also a tax-based penalty imposed if stamp duty is not paid within 12 months of the filing date. This can be up to the equivalent of the full amount of tax due.

If you are given a penalty that you believe is unjust, you have 14 days to write to HMRC from the date of the decision, lodging your appeal and explaining why you believe it is wrong.

You mentioned the rules are different for second homes and buy-to-let purchases. What stamp duty is payable in these cases?

Higher rates are levied on people buying additional homes, such as holiday cottages and investment properties. They were introduced in 2016 and apply to all purchases of £40,000 or more.

The standard and higher rate stamp duty charges are as follows:

  • Properties up to £125,000 – 0% standard, 3% higher rate
  • The proportion of the cost between £125,000 and £250,000 – 2% standard, 5% higher rate
  • The proportion of the cost between £250,000 and £925,000 – 5% standard, 8% higher rate
  • The proportion of the cost between £925,000 and £1.5 million – 10% standard, 13% higher rate

If you are a first-time buyer with a question about moving home, our residential property expert, Sarah Gaunt, would love to hear from you. Email:

Sarah Gaunt

Sarah is a partner in our residential conveyancing department and is accomplished in all areas of the discipline. For more information on this topic email or call her on 0114 218 4060.

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