UK homebuyers may find it more difficult to get a mortgage, as lenders deal with a wide range of new regulations aimed at preventing lending to people more likely to default on their mortgages. The new regulations require homebuyers to take strict tests aimed at assessing their ability to cover all aspects of household spending….
Since December of 2003 the new Stamp Duty Land Tax has taken the place of the old stamp duty when purchasing properties which include houses, flats, buildings and even land. The amount you pay is a percentage of the purchase price and these percentages are graded into bands. Even a £1 difference in price could mean paying literally thousands extra in stamp duty so you will want to keep a Stamp Duty Calculator UK bookmarked on your web browser if you are in the process of purchasing real estate. Negotiating price down a few pounds could save you a significant amount of money in the end.
Understanding the Basics of Stamp Duty
The first thing you will want to understand is how the stamp duty bands are graded. Bear in mind that they are subject to change from tax year to tax year but at the current moment they are graded as follows:
- 0% for properties costing between £0 and £125,000
- 1% for properties costing between £125,000 and £250,000
- 3% for properties costing between £250,000 and £500,000
- 4% for properties costing a sum greater than £500,000
- 5% threshold for properties over £1 million (as of 6 April, 2011)
You also need to understand that the Stamp Duty Land Tax is paid on the entire cost/value of the property, not just the amount above a threshold which would be the case with such taxes as income tax. Therefore, if you purchased a plot of land which costs £125,000 you would pay £1,250 in Stamp Duty, but if that same property was sold for just £124,999 there would be no Stamp Duty. You can see how this would provide a significant savings, especially on more expensive real estate.
How a Stamp Duty Calculator UK Works
Of all the online calculators, a Stamp Duty Calculator UK is amongst the easiest to use. Online calculators are user friendly form-based software programs which are freely available on many websites. Because there are generally only two fields to fill in when looking for the Stamp Duty Land Tax on a property, it only takes knowing the selling price and then whether or not you are a first-time homebuyer. Government is continually making enhancements to first-time buyer incentives, so the amount you save could change from time to time.
For instance, a current homeowner buying a home in a new location at a selling price of £181,000 would pay stamp duty of £1,810. On the other hand, a first-time homebuyer paying the same amount would have no tax. This would be the case on properties priced up to £250,000. However, the Stamp Duty Calculator UK returns a stamp duty of £2,500.01 if just £1 is added to the sales price and if the sales price is £251,000 the stamp duty jumps to an incredible £7,530 even for a first-time homebuyer. (This would be the time for some serious negotiating with the seller!)
As you can see, a Stamp Duty Calculator UK can help you save literally thousands of pounds if you take a few moments to go online to use it. Since they are so easy to use, there is no reason not to try your hand at it the next time you are looking to buy a home, flat, building or even a piece of land