Paying Stamp Duty

What is Stamp Duty, and do I have to pay it?

Stamp Duty (officially known as Stamp Duty Land Tax or SDLT) is a fee which house buyers must pay on residential properties over a particular value. It is a percentage of the price of the property calculated on a sliding scale based on the property value.

The threshold for Stamp Duty on residential properties is £125,000. There is no Stamp Duty charged on homes that are sold for less than this price.

First-time buyers:
A 'first-time buyer' for the purpose of calculating Stamp Duty is someone who is buying their only or main residence and has never owned a freehold or had a leasehold interest in a residential property in the UK or abroad.

If the price of the property is £300,000 or below, then there is no Stamp Duty to pay for first-time buyers. First-time buyers purchasing a property for between £300,000 and £500,000 will pay five per cent of the value.

For example, if the property you want to buy is worth £450,000, you will only pay Stamp Duty on £150,000.

If the property you are buying is worth over £500,000, you will pay the standard rates of Stamp Duty even if you are a first-time buyer.

Joint ownership and Stamp Duty relief:
If you’re married and jointly buying a property you both need to be first-time buyers to get 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.

A word of caution - 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.

Paying Stamp Duty
You must send a Stamp Duty return to Her Majesty’s Revenue and Customs (HMRC) and pay the tax within 30 days of completion of your purchase.

Your solicitor will usually file your return and pay the tax on your behalf on the day of completion and add the amount to their fees. They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer.

Stamp Duty on second homes
Buying another residential property such as a second home or buy-to-let properties? Then you will have to pay an extra three per cent in Stamp Duty on top of current rates for each band. This increased rate applies to properties bought for £40,000 or more.

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.

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 self-assessment tax return, whichever comes later.

Use our Stamp Duty calculator to work out how much you will need to pay on the purchase of your new home.