When entering into a tenancy agreement, one cost that tenants need to be aware of is stamp duty. Many people are unaware of this expense or unsure of how much they need to pay, so today we will be discussing everything you need to know about paying stamp duty for your tenancy agreement.
Firstly, what is stamp duty?
Stamp duty, also known as stamp duty land tax (SDLT), is a tax paid on homes, land, and other properties in the UK. If you’re renting a property, you will need to pay stamp duty on your tenancy agreement if the annual rent is £125,000 or more. However, the amount that you need to pay will depend on the length of the tenancy agreement and the amount of rent that you will be paying.
How much stamp duty do I need to pay?
The amount of stamp duty you need to pay for your tenancy agreement is calculated based on the annual rent and the duration of the tenancy. Here are the current rates for residential properties:
– Annual rent of up to £12,500: no stamp duty
– Annual rent between £12,500 and £50,000: 1% of the annual rent
– Annual rent between £50,001 and £150,000: 2% of the annual rent
– Annual rent over £150,000: 2% of the annual rent for the first £150,000, then 5% of the amount above £150,000
For example, if your annual rent is £60,000 and you sign a tenancy agreement for three years, you will need to pay £1,800 in stamp duty (2% of £60,000 for a three-year tenancy).
How do I pay stamp duty?
If you need to pay stamp duty for your tenancy agreement, you will need to do so within 14 days of the date that the agreement was made. You can pay stamp duty using the HM Revenue and Customs (HMRC) website or by filling out a paper return and sending it to HMRC.
It’s important to note that your landlord or letting agent is not responsible for paying stamp duty on your tenancy agreement, so it’s up to you to ensure that it’s paid on time.
In conclusion, paying stamp duty for your tenancy agreement is an additional expense that you need to be aware of when renting a property in the UK. The amount that you need to pay will depend on the annual rent and duration of the agreement, and it’s your responsibility to ensure that it’s paid on time. If you’re unsure of how much you need to pay or how to pay it, it’s always best to seek advice from a qualified professional.