Can someone explain stamp duty for me?

[FeeeelixTheChat]

Being really thick but can't work this out from Googling. We are currently living in and own a (mortgaged) flat that we are thinking of renting out. We would then like to buy an additional property with our savings and then live in that as our main family home.

Does that mean we pay stamp duty on the new house?!

Yep, you'd pay a higher rate (depending on new house cost) as you already own a property.

I think if you were to sell the flat within a certain period then you can claim the additional higher rate stamp duty back.

I could be wrong though! I'm sure an estate agent or someone will be along soon with proper info 🤣

Here you go: www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#refund

Don't ask an estate agent. SDLT advice isn't their job even if they think it is

Stamp duty is payable on all property above a threshold. There is a surcharge for additional property and you will be liable for that regardless of the threshold. @MinnieMountain has provided a link to the government website and on there you will find an updated calculator showing exactly what you will pay.

You pay a higher rate of stamp duty on a second home with a lower threshold. This is usually payable to your solicitor who will pass it on.

If you sell your original house within three years you can claim back the higher rate you have paid.

I disagree with some of the above. You will pay SDLT if over £500,000 but as it is going to be your main residence, you don't pay higher rate - try answering in the alternative in the Government's SDLT calculator for a property bought for £600,000 (already own flat but moving in as main residence to new house) the tax is £5,000. If not moving in as main residence, the high rate applies and tax is £23,000.

@sawdustformypony that's not correct, there has to be a disposal of a previous main residence to be exempt. Makes sense I guess because otherwise you could rack up loads of additional properties by moving into the new one for a bit and not pay the higher rate! The other posters are right.

We're doing this @FeeeelixTheChat - yep, you will pay stamp duty on the new house. At the moment with the stamp duty holiday it's less than it would usually be, but you'll definitely have to pay as it's a second property you own.

As PPs have said, if you sell your current flat within a specified period of time (can't remember what) you can claim the stamp duty back if it takes you back down to one property.

Use the government's stamp duty calculator to work out how much - it's up to date with the current rules: www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

Yes you have to pay an additional 3%. We did this last year. You are moving from your main residence to another main residence. If you sell old house within 3 years you can claim the additional stamp duty back.

I believe that the current exemption of stamp duty until March due to Covid also includes the additional rate though so this could be a good time to save some money on stamp. This applies up to £500,000.

[quote Jujuball]@sawdustformypony that's not correct, there has to be a disposal of a previous main residence to be exempt. Makes sense I guess because otherwise you could rack up loads of additional properties by moving into the new one for a bit and not pay the higher rate! The other posters are right.[/quote]
I think that used to be the case but the English Government changed the rules - must be going back a year ago at least. Try it out with the example I gave on GOV.UK website. Just before you calculate the figure, change the question - will this be your main residence - yes and no. You'll see the tax changes accordingly. SDLT isn't easy (the LTT guidelines so much better to follow) so let me know if you still think I'm wrong. Ta.

In Scotland the additional dwelling supplement is 4%
If you move from your main dwelling to a new house and keep the old house you pay the ADS but can claim it back if you sell former property within 18 months (currently extended due to Covid)

Thats a thought...the advice to OP only applies if we are talking about properties in England.

But stamp duty land tax only applies to properties in England and Northern Ireland. In Wales and Scotland it has a different label, though it is similar in structure.

This is the wording on the gov website about main residence - is is pretty clear.

"Is the property being purchased replacing your main residence?
If your previous main residence has not yet been sold choose "No". A refund may be available if the previous main residence is sold within 3 years."

You'll pay the 3% second property surcharge on the full purchase price plus the whatever the normal stamp duty rate is on anything above £500,000 providing you complete before end of March 21. If you sell your existing property within 3 years of completing on the second you can reclaim the surcharge.

Doesn't matter which property you live in, if you or any one party in a joint purchase already owns a property anywhere in the world the second home surcharge is payable. Main residence comes into play when looking at capital gains tax upon sale of a property.

Just in case anyone reading is in Scotland then there if you sell your main residence and buy a replacement main residence it doesn't matter if you have other properties you don't pay the additional 4%

Thanks all. Yes, we are in England.

Yes, apologies I now see that I was wrong. However, it begs the question as to why HMRC are bothered as to whether any property is the 'main residence' especially in its calculation page - answering yes or no gives completely different answers.

@sawdustformypony it says underneath "if your previous main residence has not yet been sold choose no" - the guidance is all quite confusing though I agree, good old HMRC making it hard to pay them the right amount!