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A guide to Stamp Duty

Read our guide on Stamp Duty and understand the costs of buying a home.

A guide to Stamp Duty
 

 

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a government tax that is charged when you buy a property.
It is often transferred by your conveyancer when you exchange on your property, and must be paid within 14 days of purchasing your home. Only those buying a property pay Stamp Duty.

Rates are dependent on the price of the property and are organised into bands. There are different rates if you are buying a second home or a buy-to-let property and in most cases, first time buyers are exempt from paying it.
There’s further information on all these different groups below.

How much Stamp Duty do you pay?

The rate of stamp duty you pay depends on the type of property, and whether it is residential or non-residential /mixed-use.

There are several rate bands for stamp duty and the tax is calculated on the part of your property that fall within each band. You can find out the exact amount of stamp duty you'll have to pay with an online stamp duty calculator.

Residential property stamp duty rates

Stamp duty is payable on the rate of tax on the part of the property price within each tax band.
The stamp duty rates for freehold sales and transfers, and most leasehold properties, are currently:

  • 0% on the first £125,000 paid (this includes shared ownership properties if the share is under £125,000)

  • 2% on the property price between £125,001 and £250,000

  • 5% on the property price between £250,001 and £925,000

  • 10% on the property price between £925,001 and £1,500,000

  • 12% on the property price of £1,500,001 and over

For a house priced at £260,000 the Stamp Duty would be £3,000, as 2% would be paid on the £125,000 to £250,000 bracket, and 5% would be paid on the remaining £250,001 to £260,000.

A house valued at £940,000 would pay a total of £37,750 in Stamp Duty and range across 3 stamp duty percentage rates:

Purchase price bands (£)

Percentage rate (%)

Up to 125,000

0%

125,001 to 250,000

2%

250,001 to 925,000

5%

925,001 to 1,500,000

10%

Above 1,500,000

12%

Stamp Duty for First Time Buyers

From November 2017, first time buyers became exempt from Stamp Duty on properties up to £300,000. If they buy a property up to £500,000 they will pay no Stamp Duty on the first £300,000 and only pay on the remaining amount.

You will not need to do anything to qualify for this exemption – your conveyancing solicitor will ensure you meet the appropriate criteria.
 
You qualify for the Stamp Duty exemption if:

  • You are a first time buyer
  • You are buying a home that you will live in
  • Your property is below £300,000 (for no Stamp Duty at all)
  • Your property is under £500,000 (you will only pay Stamp Duty on the amount over £300,000)
  • Your property is not in Scotland or Wales. (Scotland has a slightly different scheme, please see below)
 
Make sure you know the definition of a first time buyer in this case:
  • You cannot have ever owned a property, even if you have now sold it (this includes inheritance)
  • You cannot have owned property abroad
  • If it is a joint purchase, both partners be first time buyers
  • You can own commercial property

Update: as of the Autumn 2018 budget, Stamp Duty exemption for first time buyers will apply to Shared Ownership properties up to the value of £500,000. This will include both those who elect to pay the whole tax amount upfront, as well as those who pay a portion and then pay again when they staircase upwards and buy more of the property.

Mixed-use property stamp duty rates

Properties accepted as being mixed-use qualify for a lower Stamp Duty rate than residential properties.
For a mixed-use property you pay:

  • 1% on properties from £150,000 to £250,000

  • 3% on £250,000 to £500,000

  • 4% on properties worth over £500,000

According to the HMRC, a mixed-use property is one that shares both elements of a residential and non-residential property. For example a flat that is connected to a shop.

Non-residential property includes:

  • Agricultural land

  • Commercial property – e.g. a shop

  • Land or property that is not used as a residence

  • Forests

  • More than 6 residential properties bought in a single transaction

How do you pay stamp duty?

In practical terms, your solicitor or conveyancer will generally deal with Stamp Duty on your behalf. As a rule of thumb, they tend to submit your return and pay the amount due on the date of completion, and either add the amount to their fees or (more commonly) collect the amount from you in advance. As of 1st March 2019, Stamp Duty must be paid within 14 days of the 'effective date' of completion.

Regardless of whether tax is payable on a property, you are obliged to provide a return to HMRC. If the return is not received within 14 days of the completion of the transaction, you could be issued with a fine.

It is impossible to register a change in the ownership of land without the certificate that is provided by HMRC following the acceptance of a return.

Exemptions

There are certain situations in which you may be eligible for SDLT reliefs and exemptions. Stamp Duty reliefs can reduce the amount of tax you pay, however you must complete an SDLT return in order to claim, even if no tax is payable.

You don’t have to pay SDLT or file a return if:

  • property is left to you in a will

  • property is transferred because of divorce or separation

  • property purchased is over the £125,000 price band and the seller agrees to accept a lower offer

  • property is given as a gift or transferred with no money or other payment exchanging hands

  • property is a holiday lodge - any property that is movable is exempt

  • property is a houseboat - only purchases that use land space are taxable - unless your houseboat comes with a large garden, then you may still be charged

Stamp Duty for Buy-to-Let

Buy-to-Let Stamp Duty rules mean that if you are buying an additional property, you will have to pay an extra 3% in Stamp Duty. This includes Buy-to-Let landlords and those buying second homes and holiday homes.

You will not need to pay the higher rates if you are purchasing a caravan, mobile home or houseboat, and if the total property value is under £40,000, you will not be required to pay any Stamp Duty.

It is important to note that if you purchase a new home before you have sold your first property you will also have to pay the additional 3% SDLT. If you are unable to sell your first home within 18 months of buying your new property, then you will not be entitled to reclaim the 3% SDLT surcharge.

Buy-to-Let stamp duty rates:

Purchase price bands (£) SDLT
Up to £125,000 3%
£125,001 to £250,000 5%
£250,001 to £925,000 8%
£925,001 to £1,500,000 13%
Above £1,500,000 15%

Scotland Land and Buildings Transaction Tax

Stamp duty in Scotland is now referred to as ‘Land and Buildings Transaction Tax’ and includes residential and commercial land and buildings transactions.

Properties costing less than £145,000 do not incur the tax.

Land and Buildings Transaction Tax bands:

Purchase price bands (£)

LBTT percentage rate (%)

Up to £145,000

0%

Above £145,001 to £250,000

2%

Above £250,001 to £325,000

5%

Above £325,001 to £750,000

10%

Over £750,000

12%

 
First time buyers in Scotland

As of June 2018, Scotland have introduced an LBTT exemption for first time buyers up to the value of £175,000. If the property value is over that threshold, first time buyers will benefit from an exemption for the portion of the property that falls under £175,000. Which means all first time buyers who meet the criteria will benefit from a saving of at least £600.

The definition of a first time buyer is the same as for the Stamp Duty exemption - you cannot have owned property anywhere else in the world and you must be intending for the property to be your main residence.

Additional properties in Scotland


As of 25th January 2019, property buyers in Scotland must pay a 4% surcharge for additional properties, such as second homes and Buy-to-Let. This is called an Additional Dwelling Supplement (ADS). Any property under the total value of £40,000 will not have to pay this.

Purchase price bands (£)

Old LBTT percentage rate (%)

New LBTT percentage rate (%)

Up to £145,000

3%

4%

£145,001 to £250,000

5%

6%

£250,001 to £325,000

8%

9%

£325,001 to £750,000

13%

14%

Above £750,000

15%

16%

Land Transaction Tax in Wales

In Wales, Land Transaction Tax replaced the Stamp Duty Land Tax.

The change in taxation means that there is nothing to pay on properties worth up to £180,000. As the average cost of a property in Wales is £150,000 (2017) there are many who will benefit from the changes, but as the thresholds on more expensive properties have been lowered, those with properties of a higher value will be paying significantly more.

The Welsh rates are:

Purchase price bands (£)

Percentage rate (%)

Up to 180,000

0%

180,001 to 250,000

3.5%

250,001 to 400,000

5%

400,001 to 750,000

7.5%

750,001 to 1.5 million

10%

Above 1.5 million

12%


 

Stamp Duty Calculator

You can find out the Stamp Duty Land Tax cost of your house move through our online stamp duty calculator.

Updated February 2019

Comments (10)

  • Sye

    posted on 26 Aug 2012

    Great information please let me know what we are getting for paying this stamp duty ....many thx

    Sherry

    posted on 17 Sep 2012

    is it true that there is no stamp duty on new build properties?

    shirley hambelton

    posted on 23 Jul 2014

    I am shocked! We had no idea of the costs involved, we last moved 17 years ago, because of your article we shall have to revise our plans, good job that one of the agents sent this onto us, so we are very grateful, wow, what a shock, thanks very much, shirley

    Lorraine

    posted on 1 Mar 2016

    We're retired and thought we might downsize, the calculations reveals we can't afford to do so. Absolutely ludicrous that stamp duty should cost so much, how can a few taps on a keyboard and a piece of paper be so expensive and as for estate agent fees, charging a percentage of the sale price is daylight robbery. Why should the same percentage fee be paid to them regardless of the size and location of a property especially so for properties that are sold quickly compared to those that sit on the market for months. Their fee is far higher than a solicitors who have more work to do. Why not a flat rate for a property that sells quickly and another for those that don't.

    Reallymoving response

    Hi Lorraine.  Thanks for your comments, and we entirely sympathise with you situation.

    If you are living in an area where houses sell quickly with minimal effort, you may want to try an online estate agent hybrid such as www.ewemove.com or www.purplebricks.com.  They work out hundreds of pounds cheaper.

    Good luck

    Ben

    posted on 22 Dec 2017

    Me and my brother jointly own 2 properties both valued at £140,000 each. We are wanting to move one property from mine and his name to mine and my partners name (She doesn't own any properties currently) There is no money exchanging hands between any of us. Do we still have to pay stamp duty or are we covered by one is the exemptions?

    Christine goscombe

    posted on 4 Aug 2018

    We are buying a buy to let property can we claim a refund later.

    Reallymoving response

    You can only claim a refund if you are intending that property to become your main residence when you sell your first property. Usually, if you sell your property within 3 years of buying the second home, you can claim a refund, however it may be that using the property as buy to let causes issues, even if you do intend for it to be your home later on.
    Definitely talk to your conveyancing solicitor for a more detailed breakdown.

    Victoria Rowan

    posted on 20 Nov 2018

    I own a home valued 74k. Me and my boyfriend are looking to buy a property together max 125k. We are thinking about letting out my current property valued 74k. How would stamp duty affect us?

    Helen

    posted on 8 Jul 2019

    Slightly unsure about amount of stamp duty in this situation: we now own our own our current property which we plan to let out and we are buying another property worth 260K to have as our main residence. We’ve been told the stamp duty will be over 10K is that correct?

    Reallymoving response

    Hi Helen,

    From our understanding here, you would pay the 'second home' Stamp Duty rate on your new property when you buy it. This looks to be around £10,800.
    However, as you'll be designating the second home as your residence, and the first home as your buy-to-let, there may be a rebate of some sort, as your secondary property becomes your residence, and your first property becomes your investment. This will depend on whether the new home you're buying is higher in value than the property you will be letting out. 
    We would recommend talking to your solicitor about this, as they will have an in depth understanding of the Stamp Duty Expectations.

    Kind regards,
    reallymoving

    Larse

    posted on 31 Jul 2019

    We recently purchased our second home and paid stamp duty, however we now feel, the current house requires substantial work that has really overwhelm us financially and physically. We are thinking of selling the house and buy another house, my question is can we get a stamp duty exemption or would we have to pay again, since we already paid. Any help would be great .

    Reallymoving response

    Hi Larse,

    It's our understanding that whenever you buy a second property, you will pay the increased Stamp Duty. 

    However, you could confirm this with your conveyancing solicitor.

    Best of luck with your next property,
    reallymoving
     

    Ruth

    posted on 6 Nov 2019

    A few months ago I sold a houseboat which I owned with a friend. I haven't lived on the boat for several years. I am now looking to purchase my first house, the deposit for this comes from the sale of the boat. Am I still able to get a first time buyers reduction on the stamp duty?

    Reallymoving response

    Hi Ruth,

    That's a really interesting question and not one we've had before. From doing a little research, it seems as if your first time buyer Stamp Duty exemption would be intact, as the houseboat would have been moveable and not considered as freehold or leasehold on a property/piece of land. Also, houseboats, caravans etc don't incur the increased second property Stamp Duty tax, which suggests they would not be counted.

    However, it is worth confirming this with your conveyancing solicitor.

    Kind regards,
    reallymoving

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