What is stamp duty – and do I have to pay it?

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax you pay as a lump sum when you buy a house and was introduced in December 2003. You don't have to pay this if you are a first time buyer. If you aren't buying for the first time you'll have to pay this tax on your house purchase on residential properties over £125,000 or non-residential properties over £150,000. 

On 22nd November 2017 a rule came in from the Autumn Budget that meant that first time buyers received relief on Stamp Duty Land Tax which means they pay less or no tax if; 

  • The house purchase is completed on or after 22nd November 2017
  • They intend to live in the purchased property as their main or only residence
  • The purchase price is £500,000 or less
  • They, and anyone else they buy with is a first time buyer

How much Stamp Duty Land Tax do I have to pay?

The Stamp Duty Land Tax rate and the amount you pay varies firstly according to whether the land or property is residential or non-residential and mixed use. 

But you'll only pay that sliding scale rate for the proportion of the property price that’s inside that band, according to these rules for Freehold sales:
  • Up to £125,000: Zero
  • 2% on the next £125,000 (between £125,001 and £250,000) 
  • 5% on the next £675,000 (between £250,001 and £925,000) 
  • 10% on the next £575,000 (between £925,001 and £1.5m)
  • 12% on anything above £1.5 million.
View the Government's Stamp Duty Land Tax calculator to work out what your SDLT could be. 

When do I pay stamp duty? 

When you buy a new home you submit a Stamp Duty Land Tax return to HMRC and pay what you owe within 30 days of completion. If it’s not paid, you’ll be charged a £100 penalty plus interest. Usually your solicitor will deal with the stamp duty return and payment for you but it is best to double check with them whether they are dealing with it or not. 

If the purchase price is below £125,000, or you are a first time buyer purchasing a property up to £300,000, you still need to submit a return even though you won’t need to pay any stamp duty, again this will usually be dealt with by your solicitor. 

Can I reduce my stamp duty? 

There are some circumstances in which stamp duty is either not payable or can be legitimately reduced. 
  • Transfer some of your home’s value. This only applies if you’re divorcing or separating from your spouse or partner but there’s no stamp duty to pay if you transfer a proportion of your home’s value to them.
  • Transfer the deeds of your home to someone else – either as a gift or in your Will – they won’t have to pay stamp duty on the market value of the property. However, if you exchange properties with another person, you’ll each have to pay stamp duty on the property you receive based on its market value. Visit the gov.co.uk website for more on this and other situations where stamp duty may not be payable. 

Remember to factor in paying your Stamp Duty Land Tax alongside your savings for your deposit and other moving costs. Check out our range of savings accounts to see if there is something suitable for your next home savings. 

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