Stamp duty: everything you need to know

Stamp duty: everything you need to know

Stamp duty is the money you pay to the taxman when you buy property or land in the UK worth over a certain value.

As part of their September mini-budget, Lizz Truss’ short-lived government made cuts to stamp duty to make purchasing property more affordable. 

However, as part of the next government’s autumn budget, chancellor Jeremy Hunt announced that these cuts would be reversed from April 2025. 

Here’s everything you need to know about this tax.
 

Stamp duty is a tax you have to pay when you purchase property or land.

Wherever you live in the UK, you will have to pay money to the taxman, but it has different names:

• England and Northern Ireland: stamp duty land tax (SDLT)
• Wales: land transaction tax (LTT)
• Scotland: land and buildings transaction tax (LBTT)

You are liable to pay stamp duty (or land transaction tax) when you:

• Buy a home outright or with a mortgage
• Purchase property or land that is worth more than £40,000
• Buy a freehold or leasehold property
• Buy a property through a shared ownership scheme
• Are given land or property in exchange for payment, such as if you take on a mortgage or buy a share in a house

 

What changes have been made to stamp duty?

Former chancellor Kwasi Kwarteng announced cuts to stamp duty as part of Liz Truss’ government’s September mini-budget in an attempt to spark growth within the housing market. 

The minimum cost of a property on which homebuyers pay stamp duty in England and Northern Ireland has been raised from £125,000 to £250,000. For first-time buyers, this figure has increased from £300,000 to £425,000.

Previously, first-time buyers would only benefit from different stamp duty rates if the cost of the property they were buying was £500,000 or less. This amount has now increased to £625,000. If first-time buyers are purchasing a property greater than £625,000, they will pay the standard stamp duty rates.

This means first-time buyers could save a maximum of £6,250 on the purchase of their home, while everybody else could save up to £2,500.

These changes will make it more affordable for people to move house, and make it easier for many first-time buyers to get on the housing ladder.

However, from 31 March 2025, all of September’s changes to stamp duty will be reversed, with them essentially becoming a stamp duty holiday rather than a permanent change. This means the cost of a property on which you start paying council tax will revert to £125,000 from £250,000, and to £300,000 from £425,000 for first-time buyers. 

 

How much is stamp duty?

How much you pay in stamp duty depends on:

• Where in the UK you are buying
• The value of the property
• If you are buying a main home or additional property
• Whether you are a first-time buyer or not (more on this in the next chapter)

Stamp duty is calculated on the part of the property price that falls within each band.

In England and Northern Ireland the stamp duty rates are:

 

Property value	Current stamp duty rate	Stamp duty rate from 31 March 2025
Up to £125,000	0%	0%
£125,001 to £250,000	0%	2%
£250,001 and £925,000	5%	5%
£925,001 and £1.5 million	10%	10%
Above £1.5 million	12%	12%

Here’s an example:

• You’re buying a £350,000 property in England or Northern Ireland 
• You aren’t a first-time buyer so aren’t eligible for stamp duty tax relief (
• This means that you would be charged 0% stamp duty on £250,000 of the property
• But you would pay stamp duty at a rate of 5% on the remaining £100,000 of the house
• In total you would pay 5% of £100,000 which is £5,000 

You can use the government’s stamp duty calculator to work out how much you will need to pay.

In Scotland the tax rates are:

 

Tax Band	Normal rate
Less than £145k	0%
£145k to £250k	2%
£250k to £325k	5%
£325k to £750k	10%
rest over £750k	12%

Here’s an example:

• You’re buying a £250,000 property in Scotland
• You aren’t a first-time buyer so aren’t eligible for stamp duty tax relief (
• This means that you would be charged 0% stamp duty on £145,000 of the property
• But you would pay stamp duty at a rate of 2% on the remaining £105,000 of the house
• In total you would pay £2,100 

 

In Wales the tax rates are:

 

Price threshold	LTT rate
The portion up to and including £180,000	0%
The portion over £180,000 up to and including £250,000	3.5%
The portion over £250,000 up to and including £400,000	5%
The portion over £400,000 up to and including £750,000	7.5%
The portion over £750,000 up to and including £1,500,000	10%
The portion over £1,500,000	12%

Here’s an example:

• You’re buying a £250,000 property in Wales
• This means that you would be charged 0% stamp duty on £180,000 of the property
• But you would pay stamp duty at a rate of 3.5% on the remaining £70,000 of the house
• In total you would pay £2,450 

 

To work out the amount of tax you would pay in Wales.

Bear in mind that if you buy an additional residential property then you will have to pay extra stamp duty. We explain more on this in the section later in this guide on second homes.

 

There are also different rules and rate calculations for:

• Corporate bodies
• People buying six or more residential properties in one transaction
• Shared ownership properties
• Multiple purchases or transfers between the same buyer and seller (‘linked purchases’)
• Companies and trusts buying residential property

 

Do first-time buyers pay stamp duty?

If you’re buying your first home, you might be entitled to first-time buyer tax relief.

This means that most (but not all) first-time buyers enjoy a higher stamp duty threshold than people who have previously bought homes. 

The threshold is different depending on where in the country you are buying:

• As of September 2022, first-time buyers in England and Northern Ireland are exempt from stamp duty for properties worth up to £425,000
• Since 2018, first-time buyers in Scotland have had a higher tax-free threshold of £175,000
• In Wales there is no special threshold for first-time buyers, meaning they pay the same land tax as home movers with a tax-free threshold of £185,000

Look at the table below to see the different rates depending on the region as we outline in the tables below.

The rates for first-time buyers in England and Northern Ireland are as follows:

Property value	New first-time buyer rate	First-time buyer rate from 31 March 2025
Up to £300,000	0% stamp duty	0% stamp duty
£300,001 to £425,000	0% stamp duty	5% stamp duty
£425,001 to £500,000	5% stamp duty	5% stamp duty
£500,001 to £625,000	5% stamp duty	No first-time buyer’s relief, so you paid the standard rates
Over £625,001	No first-time buyer’s relief, so you pay the standard rates	No first-time buyer’s relief, so you paid the standard rates

The Scottish government introduced first time buyer relief in June 2018. The thresholds are shown below.

Tax Band	First-time buyer rate
Less than £175k	0%
The portion between £175k and £250k	2%
£250k to £325k	5%
£325k to £750k	10%
rest over £750k	12%

There is no land tax relief for first time buyers in Wales so will pay the same land tax as home movers. 

However, given that there is a tax-free threshold of £180,000 in Wales, many first time buyers don’t have to pay any tax when buying their first home. The average cost of a home is £216,000 in Wales according to the latest figures from the Halifax house price index. 

 

How much is stamp duty on a second home?

Buying an additional property such as a holiday home or buy-to-let property will mean you’ll be hit harder than those buying a main residence.

What’s the stamp duty surcharge on second homes?

Those buying second homes or buy-to-let properties have to pay extra tax.

There are different names and rates depending on the country you are buying the property in:

• In England and Northern Ireland this is known as a stamp duty surcharge, which is charged at a rate of 3% on top of the normal tax bands. 
• If you’re buying an additional property in Scotland then you have to pay the additional dwelling supplement (ADS); the rate varies depending on the value of the property.
• In Wales it is the higher rate of LTT; the rate varies depending on the value of the property.

The surcharge rates in England and Northern Ireland:

The surcharge is payable on the whole price for any property over £40,000. It has been in force in England and Northern Ireland since April 2016.

Property value	Stamp duty rate
Properties up to £250,000	3% (0% + 3% surcharge)
£250,001 and £925,000	8% (5% + 3%)
£925,001 and £1.5m	13% (10% +3%)
The remaining amount, above £1.5m	15% (12% + 3%)

So for example:

• Say you bought a £350,000 property and you already own a house
• You would pay 3% stamp duty on the first £250,000 of the property (which is £7,500)
• You would also pay a 8% surcharge on the remaining £100,000 value of the property (which is £8,000)
• This means you would have to pay a total of £15,500 in stamp duty

You can use the government’s stamp duty calculator to work out how much you will need to pay.

The tax rates for extra properties in Scotland:

In Scotland the tax levied on second homes is known as the additional dwelling supplement. We outline the rates below.

Unlike England and Northern Ireland, you don’t have to pay the normal rates of stamp duty on top of the additional dwelling supplement.

Property value	Additional dwelling
Less than £145k	4%
The portion between £145k and £250k	6%
£250k to £325k	9%
£325k to £750k	14%
More than £750k	16%

So for example:

• Say you bought a £250,000 property in Scotland
• You would pay 4% stamp duty on £145,000 of the property (which is £5,800)
• You would pay 6% surcharge on the portion between £145,000 and £250,000 (which is £6,300)
• This means you would have to pay a total of £12,100 in stamp duty

 

The tax rates for extra properties in Wales:

For residential purchases in Wales, the rate is based on amounts between bands, not on the full purchase price of a property. 

Price threshold	Land tax surcharge
Up to and including £180,000	4%
Portion over £180,000 up to and including £250,000	7.5%
The portion over £250,000 up to and including £400,000	9%
£400,000 to £750,000	11.5%
£750,000 to £1,500,000	14%
The portion over £1,500,000	16%

So for example:

• Say you bought a £250,000 property in Wales
• You would pay 4% stamp duty on £180,000 of the property (which is £7,200)
• You would pay 7.5% on the portion between £180,000 and £250,000 (which equals £5,250)
• This means you would have to pay a total of £12,450 in stamp duty

 

For more information on buying a second home.

There are certain types of properties where no stamp duty is due regardless of whether it is your main home or an additional one:

• Caravans
• Mobile homes 
• Houseboats

Am I entitled to a stamp duty refund?

If you buy a new home but there is a delay in selling your previous property, you will technically own two homes. This means that you will have to pay more tax.

The rate of tax you have to pay for additional properties varies depending on the region it is located. 

However, you can apply for a refund if you sell or give away your previous home within a certain period of time depending on whether you live:

• In England, Northern Ireland and Wales you have a three year window between buying your new home and selling your previous one
• However in Scotland you have to sell your previous main residence within 18 months to be able to claim a refund for the additional dwelling supplement

Bear in mind that the property you sold has to have been your main residence for you to be eligible for a refund.  

 

How and when do I pay stamp duty?

You have 14 days from completing the purchase to send a stamp duty return to HMRC and pay your bill.

This is usually sorted by your solicitor or conveyancer on your behalf. They will normally collect the money from you in advance then submit your return to HMRC and pay the stamp duty on completion day.

Any costs will be added to your solicitor’s fees and they will also reclaim any relief you may be eligible for.

You can also file a return and pay the tax yourself. 

If you don’t have to pay stamp duty on your new home, you still need to submit a return. There are certain situations where you do not need to send a return.

Can you pay stamp duty on a credit card? 

You can’t pay stamp duty by personal credit card, although you can with a corporate credit card. 

You will will have to pay a non-refundable fee if you pay using a corporate credit or debit card. There is no fee if you pay by personal debit card.

Can stamp duty be added to my mortgage?

Yes, it is possible to add stamp duty to the cost of your mortgage.

However, bear in mind that you will be charged interest on the stamp duty payments during your mortgage term. It would also affect your loan to value.

 

Should I add my stamp duty bill to my mortgage?

A few thousand pounds of stamp duty might seem like a small amount of money compared to your mortgage. 

Some people add the stamp duty to their home loan rather than paying it upfront. 

However, we don’t recommend this for the following reasons:

• You will need to borrow more money
• It will increase your loan-to-value ratio, which may affect whether you get the best mortgage deals
• You will be charged interest on the stamp duty payments
• It could increase the length of your mortgage term or increase your monthly repayments

 

Can I avoid stamp duty?

There are a number of reliefs and exemptions available to lower or even side-step stamp duty altogether. 

Here are some of the main ones:

• If a property’s price is just above a higher band, you can ask the seller or estate agent if they will accept a slightly lower price
• You could gift a mortgage-free property to someone they won’t have to pay stamp duty
• If you are divorcing or separating there’s no stamp duty to pay if you transfer your share of your home’s value to your former partner

 

Source The Times