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Home > Landlord & Tenant > Stamp Duty Information Stamp Duty InformationThe following is only intended as a quick guide to stamp duty, and is not meant to be comprehensive. If you have any further questions, we would recommend that you contact the public stamp office direct, their phone numbers and addresses are at the bottom of this sheet. When you rent property, you need to make sure that you abide by all the relevant rules and regulations. One of these that can frequently be overlooked by Landlords and Tenants alike is stamp duty. Both parties can be liable for stamp duty if it has not been paid, therefore, both Landlords and Tenants should read the following. In many cases stamp duty will not be required, however, in the cases where it is, it must be paid, otherwise, the Tenant and Landlord may become liable not only for the original stamp duty, but also interest and penalties. When should stamp duty be paid? Need to look at furnished and unfurnished tenancy agreements separately. 1) Furnished Property - 'For a property to be classed as a furnished letting, there must be a reasonable degree of comfort available to the Tenant when he or she moves in. Furniture such as bed, tables, chairs and so on must be provided as well as cooking facilities.' To answer the question of when stamp duty should be paid on furnished tenancy agreements, it is probably best to start with the situations when stamp duty does not need to be paid: - If the total annual rent for the property is £5,000 or less then you do not need to pay any stamp duty, and, therefore, you do not need to read any further. (This is an average monthly rent of £416.67 or a weekly rent of £96.15) - If the total for a term less than a year is less than £5,000. (For example a six month let, the rent could be as high as £832.32, or a weekly rent of £192.30. The key thing to remember is that the rent should not be more than £5,000 for the period.) However, if the total rent on the premises is in excess of £5,000 then you should read the following, to limit your stamp duty and ensure you are complying with the law. - Annual Rents - Stamp duty is calculated on the amount of rent paid, at a calculation of 1%, per annum, and is rounded up in units of £5, with the minimum payment of £5. If the rent for the year is £7,000 then stamp duty would be £70, calculated as follows, 1% of £7,000 = £70, rounded up to the nearest £5, is £70. If the rent for the year is £8,000, then stamp duty would be £80, calculated as follows, 1% of £8,000 = £80, rounded up to the nearest £5, is £80. Always remember though that stamp duty is rounded up to the nearest £5. Thus if the rent was £7,200, the stamp duty would be £75, calculated as follows, 1% of £7,200 = £72, rounded up to the nearest £5, is £75. - Less than a year - If a property is let for less than a year, even if the amount charged is in excess of £5,000, the stamp duty will only ever be £5. Therefore, the astute landlord will make a 364 day tenancy agreements rather than an annual one, for high rents, as the stamp duty will only ever be £5. Stamp duty must be paid within 30 days of the date the agreement becomes effective. This is normally the date on the document. If you don't have the document stamped within this period, you will be liable to pay a penalty as well as the stamp duty. Interest charges will also arise if the correct amount of duty has not been paid on time. 2) Unfurnished Property - 'An agreement which does not fall exactly into the categories for furnished letting, will be liable to stamp duty as if it were a lease.' However, for most unfurnished assured shorthold agreements, the stamp duty is not dissimilar to furnished agreements, when the letting period is for under 7 years. The rules of 1% apply for 7 years or less or indefinite, as with furnished assured shortholds, and likewise, if the annual rent is less than £5,000 no stamp duty is payable. For examples therefore, please see the furnished lettings. Should your term be for more than 7 years, it would be advisable to contact he Stamp Office direct on the numbers below. For both furnished and unfurnished: Which document should the stamp duty be paid on? If the Landlord and Tenant each sign both copies, one would attract full duty, and the other, a fixed duty of £5 as a Duplicate. Before a duplicate can be stamped, we will need to see evidence that the full duty has been paid on the other agreement. If the original document is charged with £5 fixed duty the same rate will apply to the counterpart/duplicate. Where Should The Documents Be Sent For Stamping? Documents for stamping should be taken or sent to any of the following Stamp Offices. Belfast Stamp Office
Birmingham Stamp Office
Bristol Stamp Office
Edinburgh Stamp Office
London Stamp Office
Worthing Stamp Office
Manchester Stamp Office
Newcastle Stamp Office
Should you have any questions or queries, we would recommend contacting the Stamp Office direct on any of the above contact numbers, or, alternatively, at www.inlandrevenue.gov.uk/so. | |||
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