What is stamp duty?

Stamp duty land tax (SDLT) is a tax that you may need to pay when you buy a property in England or Northern Ireland. In Scotland there’s a similar tax called land and buildings transaction tax and in Wales it’s called transaction tax.

If you’re buying a residential property, the amount of stamp duty you owe depends on the price you pay for the property and if you’re:

  • A first-time buyer
  • Buying a buy-to-let, a holiday home or a second home

Stamp duty rates

Under the current system in England and Northern Ireland, stamp duty is tiered. This means you pay different rates of stamp duty on different portions of the overall purchase price.

This means that if you buy a property for under £125,000 you won’t owe any stamp duty.

The stamp duty tiers are:
Infographic

First time buyers

First time buyers are allowed to spend more on their first homes before paying stamp duty:

  • From 1 October when all other home buyers' stamp duty threshold decreases, first time buyers will still have up to £300,000

Second home buyers

Second home buyers have to pay the extra 3% of stamp duty.

If you buy a property for £350,000 for example, stamp duty will be calculated like this:

Property price: £350,000
 

Portion 1
(£0-£125,000)

0% tax so stamp duty =
£0
 

Portion 2
(£125,000.01-£250,000)

2% tax so stamp duty =
£2,500
 

Portion 3
(£250,000.01-£500,000)

5% tax so stamp duty =
£5,000
 


Total stamp duty owed = £0 + £2,500 + £5,000 = £7,500

 

Use our stamp duty calculator to see how much stamp duty you'll need to pay.
 

In Scotland and Wales?

In Scotland and Wales, the systems are slightly different. Instead of stamp duty, Scotland has Land and Buildings Transaction Tax. It’s a lump-sum tax that’s very similar to stamp duty but the tiers and additional property rates are different.

Land and Buildings Transaction Tax rates in Scotland are as follows:
Infographic

* Properties under £40,000 are not subject to the additional land and buildings transaction rates

Figures referenced from https://www.gov.scot/policies/taxes/land-and-buildings-transaction-tax/

First time buyers in Scotland

First time buyers are allowed to spend more on their first homes before paying stamp duty:

  • From 1 April 2021 up to £175,000

In Wales, it’s called Land Transaction Tax and again, is very similar to stamp duty but with different tiers and rates.

Land Transaction Tax rates in Wales are as follows:

Infographic

* Properties under £40,000 are not subject to the additional land transaction tax rates

Figures referenced from https://gov.wales/land-transaction-tax-rates-and-bands

First time buyers in Wales

First time buyers are allowed to spend more on their first homes before paying stamp duty:

  • From 1 July 2021 up to £180,000
Use our stamp duty calculator to see how much stamp duty you'll need to pay.
 


More of your questions answered

 

When do you pay stamp duty?

If you're buying in England or Northern Ireland, you have just 14 days to pay stamp duty from the date you complete on the purchase of your property (or the date you’re due to get the keys on the contract). If you miss this date, you may have to pay a £100 fine and possibly interest.

How do you pay stamp duty?

Usually, your solicitor or conveyancer will ask you to pay the stamp duty you owe to them and will then send off the stamp duty return and pay the bill for you. You’re still legally responsible for making sure this is done on time though.

When is stamp duty not payable?

You don’t have to pay stamp duty if:

  • The property you’re buying is under £125,000 and you’re going to move into it
  • You’re buying a second home, a holiday home or a buy-to-let for £40,000 or less
  • You’re a first-time buyer and the property you’re buying is under £300,000 (or under £500,000 in London and some other areas)

Can stamp duty be paid in instalments?

No, stamp duty has to be paid in one lump sum within 14 days of you completing on the purchase of your property.

Can I pay stamp duty by credit card?

No, you can no longer pay for stamp duty with a personal credit card. You can pay it by cheque, by debit card or by online banking.

Can stamp duty be added to my mortgage?

If you don’t have enough savings to cover stamp duty as well as your deposit and buying costs, it’s possible to add the cost of the stamp duty to your mortgage but it’s best if you don’t.

The reasons it’s best not to is because:

  • It increases your long-term debt.
  • You’ll be paying interest on your stamp duty for the full term of your mortgage, which may amount to more than the stamp duty itself.
  • It could push your loan-to-value ratio (LTV) too high. The LTV is a measure of how much of the property's value you’re borrowing, and the most competitive mortgage deals usually need a maximum LTV of 60%.

Can I claim stamp duty back?

If you paid a higher rate of stamp duty because you bought an additional home you may be able to claim the extra back.  You can do this if you sell your original home within three years of buying the second property. Or if you give away your original home (to your children, for example) within three years of buying the new property.

For properties sold on or after 29 October 2018 the refund must be claimed within 12 months of whichever comes later out of the following:

  • the sale or gift of the previous main residence or
  • the date the SDLT return was filed for the new residence

For properties sold on or before 28 October 2018 the refund must be claimed within three months of selling or gifting your previous home or within 12 months of filing your SDLT tax return – whichever date is later.

There may be exceptional circumstances that allow you to request money back if you sell your original home outside of the 3 year limit.