Do You Pay Stamp Duty on New Builds?

The rules around stamp duty have changed in recent months, which may make it a little difficult to know and understand if, or what, you owe when purchasing a property. In this article, we specifically look at new build properties, and when stamp duty must be paid on these properties.

So, do you pay stamp duty on new build properties? New build properties are not exempt from stamp duty, and are subject to the same rates as older properties. However, buyers currently do not pay stamp duty on properties up to £250,000 (£425,000 for first-time buyers). 

Read on to learn more about stamp duty and when you can expect to pay it.

Do you have to pay stamp duty on new build houses in the UK?

New build properties are not exempt from stamp duty in the UK, however there are different rates of stamp duty depending on the value of the property and a number of other considerations, therefore not all buyers are subject. As of September 2022, this threshold sits at £250,000 (or £425,000 for first-time buyers) regardless of whether the property is new or pre-owned.

Do you pay stamp duty on a new build as a first time buyer?

First-time buyers do not pay stamp duty on a property up to the value of £425,000. This is on both new and pre-owned properties. After this threshold and up to £625,000, first-time buyers are subject to 5% stamp duty on that additional portion of the purchase price. 

When do you pay stamp duty?

Buyers are subject to stamp duty on most domestic properties, regardless of whether it is a new build property, a pre-owned property, a commercial property, or a buy-to-let property. But, it all comes down to thresholds and rates…

Stamp duty rates

Stamp duty is paid on portions of the property price, rather than on the whole price. For example, if a property cost between £250,001 and £675,000, you would pay 5% stamp duty on that portion of the price only, not on the whole price. 

Current stamp duty rates are:

Property valueStamp duty rateStamp duty rate on additional properties
Up to £250,000 (£425,000 for first-time buyers)0%3%
The next £675,000 (from £250,001 to £925,000)5%8%
The next £575,000 (from £925,001 to £1.5 million)10%13%
The rest of the amount (over £1.5 million)12%13%

Situations where special rates apply include:

  • A 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.

Can stamp duty be waived?

Whilst most  properties are subject to stamp duty, there are some circumstances where a buyer could gain relief or be fully exempt. These include:

  • If no money is exchanged for land or property transfer
  • If a property is left in a will
  • If a property is transferred due to divorce or dissolution of civil partnership
  • If a freehold property costs less than £40,000
  • If 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

What happens if you don’t pay stamp duty?

If you owe stamp duty on a property and don’t pay, you will be subject to penalties from HMRC, however, in most cases this will be handled by your solicitor. These penalties are as follows:

Lateness of submissionPenalty amount
Up to 12 months10% of the duty charge (maximum of £300)
12-24 months20% of the duty charge
More than 24 months30% of the duty charge

If you’re then late in paying these fees, you’ll also be subject to interest on top of what you owe from late submission.

Get Help From the Experts

At Crest Surveyors, we boast of a team of RICS Registered Valuers and Chartered Surveyors proficient and experienced at valuing a wide range of properties. We’ll provide you with a reliable valuation at an affordable price, as well as advising on if and how much stamp duty may be owed if you proceed with purchasing a property. Get in touch with us today for more information.

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