If you’re buying a home in England or Northern Ireland costing more than £125,000, you’ll have to pay Stamp Duty Land Tax (SDLT) on your purchase. Use this guide to find out about how Stamp Duty works, including Stamp Duty for first-time buyers, rates for second homes and how it is paid.
What is Stamp Duty?
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In England and Northern Ireland you’re liable to pay Stamp Duty when you buy a residential property, or a piece of land, costing more than £125,000 (or more than £40,000 for second homes).
This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.
If you’re buying a property in Scotland you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.
How much is Stamp Duty?
There are several rate bands for Stamp Duty.
The tax is calculated on the part of the property purchase price falling within each band.
For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you owe is calculated as follows:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 = £2,500
- 5% on the final £25,000 = £1,250
Total SDLT = £3,750
Stamp Duty rates*
|Minimum property purchase price
||Maximum property purchase price
||Stamp Duty rate (only applies only to the part of the property price falling within each band)
|Over £1.5 million
*Stamp duty for residential leasehold properties are charged differently.
Stamp Duty on second homes
Buyers of additional residential properties, such as second homes and buy-to-let properties, will have to pay an extra 3% in Stamp Duty on top of current rates for each band.
This increased rate applies to properties bought for £40,000 or more.
It doesn’t apply to caravans, mobile homes or houseboats.
If you buy a new main residence but there’s a delay in selling your previous main residence, you’ll have to pay the higher Stamp Duty rates as you’ll now own two properties.
However, if you sell or give away your previous main home within 3 years of buying your new home you can apply for a refund of the higher SDLT rate part of your Stamp Duty bill.
You can request a refund for the amount above the normal Stamp Duty rates if:
- you sell your previous main residence within three years, and
- you claim the refund within three months of the sale of your previous main residence, or within 12 months of the filing date of your SDLT tax return, whichever comes later.
For an application form and more information, visit the GOV.UK website
Stamp Duty relief for first-time buyers
A person is generally classified as a first-time buyer if they’re purchasing their only or main residence and have never owned a freehold or have a leasehold interest in a residential property in the UK or abroad.
If you’re a first-time buyer in England or Northern Ireland, you will pay no Stamp Duty on properties worth up to £300,000. This means if you are a first-time buyer, you will save up to £5,000.
For properties costing up to £500,000, you will pay no Stamp Duty on the first £300,000. You will pay Stamp Duty on the remaining amount, up to £200,000.
If the property you are buying is worth over £500,000, you will pay the standard rates of Stamp Duty and will not qualify for first-time buyer’s relief.
For example, if the property you want to buy is worth £450,000, you will only pay Stamp Duty on £150,000.
As of October 2018, first-time buyers under Shared Ownership schemes can now claim First-Time Buyers Stamp Duty relief on homes worth up to £500,000. This change applies to homes purchased on or after 22 November 2017.
If you chose to pay Stamp Duty in stages and were previously not eligible for the relief, you can now claim this tax back. To claim a refund, complete an SDLT return. You will have to meet the eligibility requirements. If you chose to pay Stamp Duty on the market value of the property, your entitlement to claim the relief, subject to the eligibility requirements, has not changed.
Joint ownership and Stamp Duty relief
If you’re married and jointly buying a property, then you both need to be eligible first-time buyers to get First-Time Buyers Stamp Duty relief.
Unmarried people can still get a reduction in Stamp Duty, if the only person named on the mortgage deed is a first-time buyer.
But, there are a couple of things you need to be aware of:
First, the maximum saving on a property purchase is still £5,000 regardless of the number of names on the mortgage deed.
If the mortgage application is only in one name, it will be based on that person’s income alone, which might impact how much your lender is prepared to lend you.
Second, you need to think about what would happen if you split up. If the property is in both names, you will both have a claim. If the property is only in one name, then it’s possible you or your partner could be left with nothing legally.
When do you have to pay Stamp Duty?
You have 14 days to file a Stamp Duty Land Tax (SDLT) return and pay any SDLT due. This has been reduced from 30 days since 1 March 2019.
This period starts from the effective date of the transaction, which is normally the date you completed the purchase of your home.
If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.
Find out more about Stamp Duty penalties and interest on the GOV.UK website
How to pay Stamp Duty
Usually your solicitor will deal with the Stamp Duty return and any payment due for you, although you can do it yourself.
Either way, you’re responsible for making sure it’s all submitted on time.
If the price of your new home is under £125,000, you must still submit a return (unless exempt) even though you won’t need to pay any Stamp Duty.
Learn about filing a return and paying Stamp Duty on the GOV.UK website
When is Stamp Duty not payable?
You’ll automatically avoid Stamp Duty if you buy a property for less than £125,000.
But for many homebuyers this just isn’t possible.
There are other circumstances in which Stamp Duty is either not payable or can be reduced:
- Slightly over rate band. If the price is only just within a higher band, ask the seller or estate agent if they would accept a slightly lower price.
- Transfer of property in separation or divorce. If you’re divorcing or separating from your spouse or partner, there’s no Stamp Duty to pay if you transfer a proportion of your home’s value to them. Read more in our guide Protecting your home ownership rights during divorce or dissolution.
- Transfer of deeds. If you transfer the deeds of your home to someone else – either as a gift or in your will – they won’t have to pay Stamp Duty on the market value of the property.
However, if you exchange properties with another person, you will each have to pay Stamp Duty on the property you receive based on its market value.
Find out about other situations where Stamp Duty might not be payable on the GOV.UK websiteopens in new window