Stamp duty

There are lots of costs to be aware of when buying a home, including stamp duty. Learn more about what it is and how much it costs in our guide below.

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What is stamp duty?

When you purchase a property above the current threshold of £250,000, Stamp Duty (or SDLT) is the tax you’ll pay in England and Northern Ireland. Scotland also has a version of stamp duty, known as LBTT, which is due on properties purchased above £145,00 and Wales has LTT, which applies on properties of £225,000 or over. 

How much you pay depends on the total value of the property, as the percentage of tax payable rises in increments, the higher the property value. The charges also only apply to the element of the cost that you go over that band. So, for example:

If you buy a house for £950,000, only the element above £925,001 would be charged at 10%, the element between £250,001 and £925,000 would be charged at 5% and you wouldn’t pay anything on the first £250,000.

What is the stamp duty threshold for buying a house in England?

In both England and Northern Ireland, the stamp duty thresholds are as follows: 

  • Nothing is payable on the first £250,000

  • 5% SDLT payable on properties between £250,001 and £925,000

  • 10% SDLT payable on properties between £925,001 and £1.5 million

  • 12% SDLT payable on properties above £1.5 million

What is the stamp duty threshold for buying a house in Scotland?

Stamp duty in Scotland is called Land and Buildings Transaction Tax (LBTT). It applies to properties that cost over £145,000 and uses a similar banding system.

  • Nothing is payable on the first £145,000

  • 2% LBTT payable on properties between £145,001 and £250,000

  • 5% LBTT payable on properties between £250,001and £325,000

  • 10% LBTT payable on properties between £325,001 and £750,000

  • 12% LBTT payable on properties between £750,001+

What is the stamp duty threshold for buying a house in Scotland?

Stamp Duty in Wales is called Land Transaction Tax (LTT). It applies to properties valued at over £180,000 and, again, uses a banding system.

  • Nothing is payable on the first £180,000

  • 3.5% LTT payable on properties between £180,001 and £250,000

  • 5% LTT payable on properties between £250,001and £400,000

  • 7.5% LTT payable on properties between £400,001 and £750,000

  • 10% LTT payable on properties between £750,001 and £1,500,000

  • 12% LTT payable on properties on £1,500,001+

Does everyone have to pay stamp duty? 

No, not all property buyers will need to pay stamp duty. Buyers falling into the following circumstances would likely have no stamp duty bill:

  • Anyone buying a home below the lowest threshold in their country, so £250,000 in England and Northern Ireland, £180,000 in Wales and £145,000 in Scotland

  • In England and Northern Ireland, first-time buyers who are purchasing a property below £425,000 

  • If you’re transferring property following a court order related to divorce, separation, or dissolution

  • When a home is gifted or bequeathed to you, so long as there is no outstanding mortgage

What is stamp duty tax relief for first-time buyers?

In England or Northern Ireland, there is tax duty relief available for those homebuyers who qualify as a first time buyers

A first-time buyer for tax purposes, is someone who has never owned residential property in the UK or abroad. For joint mortgages, all applicants would need to meet this criteria. The tax relief means that:

  • You pay no Stamp Duty on properties worth up to £425,000

  • You only pay 5% on the element above £425,000, on properties priced up to £625,000 - So you’d only pay it on up to £200,000 of your home’s full value 

How much is stamp duty on a second property or a buy-to-let?

If you already own a home, and buy an additional property, whether that’s a second residential home, or a buy-to-let property, you’ll be liable for an additional 3% on top of whatever stamp duty tax band you fall into.

So, for example, if your second home was worth £500,000 and you bought in England, you’d pay 8% stamp duty, not 5%.

What about if I sell the second property?

If you own two properties for less than 36 months, you can often claim back the extra stamp duty when you sell one of them on. This can be helpful for those using a let-to-buy set up, where they purchase their new home before they’re able to sell their original property. 

Stamp Duty for non-residents

If you live outside of the UK, but buy residential property in England or Northern Ireland, you may have to pay a non-UK resident premium of an additional 2% for properties costing more than £40,000.

So if you bought a property worth £250,000, you would pay 2% stamp duty, instead of none. 

How is Stamp Duty paid?

Most property transactions will use a solicitor or conveyancer, and often they pay this on your behalf when you complete your property purchase - so you’d give the funds to them, rather than HMRC. 

However, if not, it’s the home buyers responsibility to ensure they pay the money directly to HMRC. 

When do you have to pay Stamp Duty?

You have 14 days from the completion date of your property purchase to file and pay your stamp duty land tax. 

HMRC may charge penalties and interest if this deadline is missed. 

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