The threshold at which Stamp Duty is payable stands at £250,000 and if you’re buying a second home you have to pay an extra 3% on top of standard Stamp Duty rates.
When it comes to home-buying costs, Stamp Duty Land Tax (SDLT) is usually the one that hurts the most.
After putting down your deposit, it’s often the next largest cost you encounter, so it’s vital to have savings in place to cover it. Here’s what you need to know.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
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What is Stamp Duty?
Stamp Duty is a tax you need to pay when you buy a property over a certain price in England or Northern Ireland. Stamp Duty is payable on residential properties bought for £250,000 and over, and £150,000 for non-residential land and properties. These rates were introduced on 23 September 2022 and will remain in place until 31 March 2025.
Stamp Duty first originated in 1694 when William III raised the tax against paper goods to help pay for the war against France, and it proved so successful that it stuck. Since then, the tax has changed considerably and is now applied to all property purchases, with the amount of Stamp Duty you have to pay depending on your circumstances, and the purchase price of the property.
If you’re buying property in Scotland rather than Stamp Duty, you’ll pay Land and Buildings Transaction Tax (LBTT) on residential properties bought for £145,001 and over, and £150,001 for non-residential land and properties.
In Wales, when buying property, you’ll pay Land Transaction Tax (LTT) instead of Stamp Duty. You’ll pay LTT on properties bought for £225,000 and over whether they’re residential or not.
How much is Stamp Duty?
Stamp Duty in England and Northern Ireland
There’s no Stamp Duty to pay on property purchases costing up to £250,000, (or £425,000 if you’re a first time buyer).
Stamp Duty rates are as follows:
| Property or lease premium or transfer value | SDLT rate |
| Up to £250,000 | 0% |
| The portion from £250,001 to £925,000 | 5% |
| The portion from £925,001 to £1.5 million | 10% |
| The portion above £1.5 million | 12% |
You will be exempt from Stamp Duty on the first £250,000 of a property as well, meaning you only pay the tax on the portion above this.
For example, if you’re buying a property costing £500,000, your Stamp Duty bill would be £12,250 (5% of the £250,000 over the threshold).
Land Transaction Tax in Wales
In Wales, Stamp Duty is known as Land Transaction Tax and the rates are as follows:
| Price threshold | LTT rate |
| The portion up to and including £225,000 | 0% |
| The portion over £225,000 up to and including £400,000 | 6% |
| 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% |
There’s an additional surcharge on top of these rates if you’re buying a second home or property to rent out in Wales, we outline this in more detail below.
Land and Buildings Transaction Tax in Scotland
If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT), which will be charged as follows:
| Purchase price | LBTT rate |
| Up to £145,000 | 0% |
| £145,001 to £250,000 | 2% |
| £250,001 to £325,000 | 5% |
| £325,001 to £750,000 | 10% |
| Over £750,000 | 12% |
There’s an additional 6% surcharge to pay on top of these rates if you’re buying a second home or property to rent out in Scotland.
First-time buyer Stamp Duty rates
In England and Northern Ireland, if you’re a first-time buyer and the price of the property you’re buying is £425,000 or less, you won’t have to pay any Stamp Duty. If the property costs more than £425,000 but less than £625,000, you will be charged 5% on the portion above £425,000.
For example: If your home costs £270,000, you won’t be charged Stamp Duty. If your home costs £450,000, then you pay nothing on the first £425,000, and 5% on the remaining £25,000 (as £25,000 of your purchase price falls into the 5% band) leaving you with a Stamp Duty bill of £1,250.
If the property price is over £625,000, you’ll follow the rules for people who’ve bought a home before and the first £425,000 of your property won’t be exempt from Stamp Duty. That means, for example, that if the property you’re buying costs £700,000, you’d pay £35,000 in Stamp Duty.
If you’re a first-time buyer in Scotland, you wont have to pay Land and Buildings Transaction Tax on the first £175,000 of your property. If your property costs more than this, you’ll pay the usual LBTT rates.
There’s no first-time buyer relief on Land Transaction Tax in Wales.
Stamp Duty on second homes
When buying an additional property anywhere in the UK, whether as a second home or as a buy-to-let investment, you’ll usually be charged an enhanced level of tax.
Stamp Duty on second homes in England and Northern Ireland
If you buy an additional property in England or Northern Ireland, which is worth £40,000 or more, then you’ll be charged 3% extra on top of the normal Stamp Duty rates.
This means the total Stamp Duty charges are tiered as follows:
| Property or lease premium or transfer value for additional property | SDLT rate |
| Up to £250,000 | 3% |
| The portion from £250,001 to £925,000 | 8% |
| The portion from £925,001 to £1.5 million | 13% |
| The portion above £1.5 million | 15% |
The additional tax is not payable if your second home is a caravan, mobile home or houseboat.
It’s worth noting that you will also need to pay the additional charge if you buy your new home before you’ve sold the previous one because, for a short time at least, you’ll own two homes. You may be able to claim the additional tax back via your self-assessment tax return.
Land Transaction Tax on second homes in Wales
If your buy an additional residential property in Wales worth £40,000 or more, you’ll be charged what is known as a higher rate of LTT, which are as follows:
| Price threshold of second property | LTT rate |
| The portion up to and including £180,000 | 4% |
| The portion over £180,000 up to and including £250,000 | 7.5% |
| The portion over £250,000 up to and including £400,000 | 9% |
| The portion over £400,000 up to and including £750,000 | 11.5% |
| The portion over £750,000 up to and including £1,500,000 | 14% |
| The portion over £1,500,000 | 16% |
You might not need to pay the higher rate of LTT if the property is worth less than £40,000. Additionally, if your property is a mixture of residential and non-residential space (like a shop with a flat above it), is ‘moveable’ like a caravan, houseboat or mobile home or is a freehold property with a lease on it which has more than 21 years left to run, held by someone unconnected to you, you might not need to pay the higher LTT rate.
Land and Buildings Transaction Tax on second homes in Scotland
If you’re buying a second home in Scotland, then you’ll usually have to pay something call the LBTT Additional Dwelling Supplement (ADS), which is charged at 6% of the total purchase price of properties worth more than £40,000.
When do you have to pay Stamp Duty?
Homebuyers in England and Northern Ireland have 14 days from the ‘effective date’ of the transaction, which is typically the date of completion, to pay their Stamp Duty bill.
If you miss the deadline, you may be charged penalties and interest until the bill is settled. In most cases, your solicitor or conveyancer takes care of the Stamp Duty return, and will forward the Stamp Duty money you’ve paid to HMRC. If you’re buying a property without a mortgage, you can pay HMRC the Stamp Duty direct.
Even if first-time buyer Stamp Duty relief means you don’t have to pay Stamp Duty, you’ll still need to complete a Stamp Duty return in order to claim the relief.
You don’t have to file a Stamp Duty return if:
- A property is being transferred and no money is changing hands
- A property is left to you in a will
- A property is transferred because of divorce or dissolution of a civil partnership
- you’re buying a freehold property for less than £40,000
Find out more about transactions that do not need a return.
How to pay Stamp Duty
Usually, the solicitor or conveyancer you use when buying a property will calculate and arrange the payment of any Stamp Duty due on your behalf on the day of completion and add the amount to their fees. If you are eligible for Stamp Duty relief (for example, if you’re a first-time buyer) your solicitor will claim this for you. Stamp Duty must be paid within 14 days after completion.
If you aren’t using a third party to purchase your property or land, you will usually need to file a return and pay the tax yourself. There are some exceptions where you will not need to send a return, which you can read about at gov.uk.
In Wales, you have 30 days after completion to pay LTT. See more about how to pay LTT here.
In Scotland, you effectively have 30 days to pay LBTT, however it’s usually paid on settlement and is often organised by your solicitor.
Get help with the sums
Working out how much Stamp Duty you’ll have to pay isn’t always easy, but the Gov.uk website has a handy Stamp Duty calculator to help you work out how much tax you’ll need to pay.
If you’re planning to buy and need help understanding your mortgage options, our articles Mortgages for over 50s: What you need to know and Mortgages for over 60s: what you need to know may help.
Want to speak to a mortgage advisor? Speaking to an experienced mortgage advisor can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with an independent mortgage adviser at Fidelius. Speak with a qualified, FCA-regulated, independent mortgage adviser you can trust. Rated 4.7/5 on VouchedFor from over 1,250 reviews.
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