Whether you’re a first-time buyer, a landlord, or someone purchasing their forever home, understanding Stamp Duty Land Tax (SDLT) is crucial. This guide answers the most common questions to help you plan your purchase and budget effectively.
Stamp duty can significantly impact the overall cost of buying a property. With thresholds, exemptions, surcharges, and regional differences across the UK, it’s easy to get caught off guard by unexpected fees if you’re not fully informed.
As property prices fluctuate and government policies shift, it’s more important than ever to stay up to date with the latest stamp duty rules. Whether you’re looking to save money or avoid delays during your transaction, having a clear understanding of your stamp duty obligations is a vital first step.
Related: How to plan your finances when moving home
What is stamp duty?
Stamp Duty Land Tax (SDLT) is a tax you may need to pay when purchasing residential property or land in England and Northern Ireland.
In Scotland, it’s called Land and Buildings Transaction Tax (LBTT), while in Wales, it’s referred to as Land Transaction Tax (LTT). Regardless of where you’re buying, these taxes apply to both freehold and leasehold properties, and whether you’re paying in cash or through a mortgage.
How does stamp duty work?
Stamp duty works on a tiered system. This means different portions of the property price are taxed at different rates. The more expensive the property, the more tax you’ll pay. Each UK country has its own set of tax bands and rates. However, the underlying structure is similar; buyers are taxed based on price brackets, not the full property value.
Why do we pay stamp duty?
Stamp duty is a significant source of revenue for the UK government, raising billions annually. It’s designed to manage property demand, cool overheating markets, and fund public services.
Who has to pay stamp duty?
Buyers in England or Northern Ireland
- First-time buyers: No stamp duty on homes up to £300,000.
- Other buyers: Tax begins on properties over £125,000.
What is the difference in Scotland and Wales?
- Scotland (LBTT): Threshold begins at £145,000, or £175,000 for first-time buyers.
- Wales (LTT): Threshold begins at £180,000, with no first-time buyer relief.
Do sellers pay stamp duty?
No. Stamp duty is always paid by the buyer, not the seller. It only applies when purchasing a property, not when selling.
Do cash buyers pay stamp duty?
Yes. Paying in cash doesn’t exempt you from stamp duty; it’s still due based on the property’s value.
Do landlords pay stamp duty?
Yes. Landlords pay an additional 3-5% surcharge on top of standard rates for buy-to-let and second properties.
Do you pay stamp duty on a new build?
Yes. Stamp duty applies to both new builds and older properties, assuming the purchase price exceeds the threshold.
Do you pay stamp duty on second homes?
Yes, you do pay stamp duty on second homes. In the UK, an additional tax applies when purchasing a second property, such as a holiday home or buy-to-let. This includes a 5% surcharge in England and Northern Ireland, 5% Land Transaction Tax in Wales, and 8% Land and Buildings Transaction Tax in Scotland.
Do you pay stamp duty if you’re a non-UK resident?
Yes. There is a 2% surcharge on top of the usual rates for non-UK residents buying property in England or Northern Ireland.
Do you pay stamp duty on shared ownership property?
Yes. Buyers can choose to pay based on their initial share or the full market value. If you stair-step your ownership, additional stamp duty may apply.
Do you pay stamp duty on leasehold homes?
Yes. Standard rates apply, but you may also pay extra if the net present value of the lease exceeds £125,000.
What are the stamp duty rates?
England & Northern Ireland (Standard Rates):
| Purchase Price | Standard Rate |
| Up to £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5 million | 10% |
| Above £1.5 million | 12% |
First-time buyer relief
- No tax on the first £300,000
- 5% on the next £200,000 (up to £500,000)
- No relief above £500,000
How much stamp duty will you pay?
Using a stamp duty calculator is the easiest way to work this out. Once you input the details required and your property price, it provides a breakdown of how much you’ll pay. Example for a first-time buyer
Buying a property for £350,000:
- £0 on the first £300,000
- 5% on the next £50,000 = £2,500
Total SDLT: £2,500
When is stamp duty payable?
- In England and Northern Ireland: Within 14 days of completion
- In Scotland and Wales: Within 30 days of completion
Missing the deadline may result in penalties and interest.
How do you pay stamp duty?
Your solicitor or conveyancer usually pays it on your behalf. However, you’re ultimately responsible for making sure it’s submitted and paid correctly.
Can you add the stamp duty to your mortgage?
Yes, you can. However, this increases your loan amount and may impact your loan-to-value ratio, potentially leading to higher interest rates.
Can you pay stamp duty on a credit card?
No, HMRC does not accept credit card payments for SDLT.
Can you avoid paying stamp duty?
Avoiding stamp duty is rare, but you may not need to pay if:
- You’re a first-time buyer purchasing under £300,000
- The property costs less than £125,000 (£180,000 in Wales)
- It’s inherited or gifted
- It’s transferred due to divorce or separation
Can you get a refund?
Yes, refunds are possible in certain situations:
- If you sell your old home within 3 years of buying a new one and paid the higher rate.
- If you’re a non-UK resident who becomes resident within 12 months after completion.
- If you overpaid or entered incorrect information in your SDLT return.
You must apply within 12 months of selling your previous home or 2 years from the effective date for residency-based refunds. Also, if the sale deed is cancelled, a buyer is entitled to receive 98% of the stamp duty as a refund. This refund must be applied for at the sub-registrar’s office.
Source: Higher rates of Stamp Duty Land Tax – GOV.UK
Source: Apply for a repayment of the non-UK Resident Stamp Duty Land Tax surcharge – GOV.UK
Take the stress out of stamp duty
Stamp duty is an important part of the property buying process in the UK. Knowing who pays, how much is owed, and which reliefs or exemptions apply can help you plan your budget more effectively and avoid unexpected costs.
Stamp duty rules can change with little notice, so it’s essential to stay up to date, especially if you’re a first-time buyer, landlord, or buying overseas. Keeping ahead of these changes ensures you don’t miss out on potential savings.
At Martin & Co, we’re here to guide you through every step of your property journey, from calculating your costs to completing your sale. Take the guesswork out of moving, book a free property valuation with Martin & Co, and plan your stamp duty with confidence.
Further reading:
What is Shared Ownership?
Everything you need to know about buying a new-build property
What’s the difference between buying a property in Scotland vs England?
