What is Stamp Duty?

What is it?

Stamp Duty Land Tax is a tax you pay to the government when you buy a property. The amount you pay depends on the value of the property.

What are the rates?

Stamp Duty is sorted into bands – you pay a percentage on the amount of the property that falls within that band. The more expensive a property is, the more bands it covers.

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%

Example:

If you bought a property worth £550,000, the first £125,000 of your property would be charged at 0%, the next £1,250,000 would be taxed at 2%, and the remainder would be taxed at 5%. This means your Stamp Duty would be £0 (0%) £2500 (2%) plus £15,000 (5%) = £17,500.

When do you pay it?

You pay Stamp Duty Land Tax if you are purchasing a property in England or Northern Ireland. Scotland and Wales have equivalent systems with different names and rates.

If you are buying a second property, or a buy-to-let property, you will pay a higher rate of Stamp Duty.

Purchase price bands (£) Percentage rate (%)
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%

When don’t you pay it?

You don’t pay Stamp Duty if your property is under the threshold, so under £1,250,000 you would pay no Stamp Duty.

First time buyers and Stamp Duty

As of November 2017, first time buyers in England get a Stamp Duty exemption. This means that if you are a first time buyer and your property costs up to £300,000, you will not pay any Stamp Duty at all. If you are a first time buyer and your property is up to £500,000, you’ll pay 5% on the amount over £300,000 but under £500,000.

First time buyers buying a property over £500,000 will not be eligible for exemption.

There are a few rules to qualifying as a first time buyer for the exemption:

  • Does not own another property and never has owned one before (including abroad, inheritance etc)
  • If buying with another person, both have to be first time buyers to get the discount
  • You can own commercial property

Previously, this exemption didn’t fully apply to those using a Shared Ownership scheme, but this changed in November 2018.

First time buyers in Scotland get an exemption on properties up to the value of £175,000. If the property is more than that, they’ll get 0% up to £175,000 and then pay the regular amount on the rest of the property.

First time buyers in Wales do not have an exemption as the threshold is higher, and property prices in Wales are lower are general. The majority of first time buyers buy below the threshold.

How do you pay it?

Your Stamp Duty is paid to the HMRC when your purchase goes through. It must be paid within 14 days of the purchase. Usually, your conveyancing solicitor or licensed conveyancer will deal with this for you, as part of their service. You will receive a receipt for the payment.

Scotland and Wales

Scotland and Wales are responsible for their own property purchase taxes. They work in the same way as Stamp Duty, but they are controlled by their own treasuries and have different bands/rates.

Scotland has the Land and Buildings Transaction Tax (LBTT).

The 0% rate goes up to properties worth £145,000, and highest rate (12%) is applied on properties over £750,000. The rest of the bandings are the same:

Purchase price bands (£) Percentage rate (%)
Up to £145,000 0%
£145,001 to £250,000 2%
£250,001 to £325,000 5%
£325,001 to £750,000 10%
Above £750,000 12%

Second homes in Scotland incur a 4% surcharge. So properties under £145,000 will be charged 4% and it increases in tax bands.

Purchase price bands (£) Percentage rate (%)
Up to £145,000 4%
£145,001 to £250,000 6%
£250,001 to £325,000 9%
£325,001 to £750,000 14%
Above £750,000 16%

In Wales you pay Land Transaction Tax and the rates are slightly different from both Scotland and England.

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 £1,500,000 10%
Above £1,500,000 12%

Stamp Duty Calculator

If you want to quickly calculate the Stamp Duty (Or LLT, or LBTT) you need to pay, use our easy Stamp Duty Calculator.