Stamp duty

There are lots of costs to be aware of when buying a home, including stamp duty. Learn more about how stamp duty you may have to pay, whether you're a first-time buyer, moving to a larger home, or even buying a second home or investment property.

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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 Wales?

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 valued below the minimum stamp duty threshold in their respective country, so:

    • up to £250,000 in England and Northern Ireland

    • up to £180,000 in Wales

    • up to £145,000 in Scotland

  • Anyone 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 on the property

  • First-time buyers in England or Northern Ireland who are purchasing a property below £425,000 

First time buyer stamp duty

First time buyers in England and Northern Ireland will not need to pay stamp duty on their first home so long as it costs below £425,000.

There are no specific rules around stamp duty for first-time buyers in Scotland or Wales, but they would still benefit from not paying stamp duty if their first home cost below their country's stamp duty threshold.

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

Stamp duty tax relief is only available in England and Northern Ireland. It's the reason that most first time buyers won't have to pay any stamp duty at all, or will benefit from reduced stamp duty tax rates.

The scheme rules are:

  • 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 worth of the property value if you bought a home for exactly £625,000

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.

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 in a let-to-buy scenario, where a new home is purchased before the original property is sold. 

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.

Stamp duty FAQs

The changes to stamp duty thresholds introduced in England and Northern Ireland at the end of 2022 are due to end on 31 March 2025.

At the current time, it's expected that the thresholds will revert to their pre-mini-budget amounts after this date.

Most property transactions utilise a solicitor or conveyancer, who usually pay this on your behalf when you complete your property purchase - so you’d give the funds to them, rather than HMRC. 

However, where this is not the case, it’s the home buyers responsibility to ensure they pay the money directly to HMRC.

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. 

Somme lenders do allow for stamp duty to be added to your mortgage borrowing. However, keep in mind that you'll pay interest on it if you choose to add it to your mortgage balance. It's also important to consider that it will be taken into consideration when your LTV (loan-to-value) is calculated, which could affect your affordability.

The 3-year rule refers to the ability to apply for a stamp duty refund, if you temporarily own multiple properties and return to a single main residence. An example of this may be when you buy a new home before you've sold your previous one, meaning you'll be liable for stamp duty on both. You'll actually pay a higher rate on the second property.

However, if you sell off the original home within 3 years, you can apply for a refund for the stamp duty paid as an owner of multiple properties.

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