Stamp duty is a tax paid by the buyer on the purchase price of a property, not on the amount you borrow via a mortgage. It’s not payable in Scotland, which has a different system known as Land and Buildings Transaction Tax, and those living in Wales could see changes to their system from March 2018. 


New laws relating to stamp duty for first-time buyers

New laws have been introduced that have seen stamp duty abolished in England and Northern Ireland for first-time buyers on home purchases of up to £300,000. In these countries (and in Wales until next March), first-time buyers will pay 5% on properties that cost from £300,001 up to £500,000, and the standard rate on anything over £500,000.

If your home costs £280,000, you pay no stamp duty.

If your home costs £325,000, then you pay nothing on the first £300,000, and 5% on the remaining £25,000 (as £25,000 of your purchase price falls into the 5% band).  
Total stamp duty to pay: £1,250.

How much is stamp duty if I’m not a first-time buyer?

If the property you’re buying will be your main home, then stamp duty is charged as follows:

  • Nothing on the first £125,000 of the purchase price
  • 2% between £125,001 and £250,000
  • 5% between £250,001 and £925,000
  • 10% between £925,001 and £1,500,000
  • 12% above £1,500,000

If your home costs £120,000, you pay no stamp duty.

If your home costs £240,000, then you pay nothing on the first £125,000, and 2% on the remaining £115,000 (as £115,000 of your purchase price falls into the 2% band).
Total stamp duty to pay: £2,300.

If your home costs £500,000, then you pay nothing on the first £125,000; 2% on the amount between £125,000 and £250,000, which is £2,500; plus 5% on the remaining £250,000 (the amount of the purchase price that falls into the 5% band), which is £12,500.
Total stamp duty to pay: £15,000.

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How much do I pay in Scotland?

Scotland’s Land and Buildings Transaction Tax has the following bands:

  • Nothing on the first £145,000
  • 2% between £145,001 and £250,000
  • 5% between £250,001 and £320,000
  • 10% between £320,001 and £750,000
  • 12% above £750,00

When does stamp duty apply?

You should expect to pay stamp duty on all property purchases, including leasehold property and purchases that don’t involve a mortgage. So when buying a home, you need to consider whether you’ll be able to afford the stamp duty on top of all the other costs involved.

There are only a few exemptions to the need to pay stamp duty, and these include:

  • When a portion of a home is transferred to a spouse or partner following a separation or divorce
  • When you transfer the deeds of your home to another person as a gift
  • If you fall into the new first-time buyer category and are buying a home for up to £300,000, then you won’t have to pay stamp duty.

Stamp duty on second homes

If you buy an additional property worth £40,000 or more, then you’ll pay an extra 3% of the purchase price in stamp duty. This additional charge applies whether you purchase a second home or a buy-to-let property. This works out as: 3% payable on the first £125,000; 5% on the next £125,000; 8% between £250,001 and £925,000, and so on…

The additional tax is not payable if your second home is a caravan, mobile home or houseboat.

You’ll also need to pay the additional charge if you buy your new residential property before you’ve sold the previous one because, for a short time at least, you’ll own two homes (in these circumstances, there may be ways of claiming the additional tax back via your self-assessment tax return).

The 3% surcharge applies to any of the following:

  • Your main home is abroad and the second home you buy is in the UK
  • The property is located in Scotland – the Scottish Government also adds 3% to its Land and Buildings Transaction Tax rates for second home purchases
  • The second home is bought via a limited company.

Stamp duty returns

Your solicitor usually submits a stamp duty return for you. However, whether you use a solicitor or not, it’s your responsibility to ensure that the return is filed with HM Revenue & Customs within 30 days of the completion of the house purchase. If you don’t meet this deadline you could be fined and charged interest on the unpaid amount.

A stamp duty return must still be submitted even if no duty is payable. 


Stamp duty in summary

Stamp duty is just one of the many charges that have to be paid when buying a home. Just make sure you understand how much stamp duty you’ll need to pay (first-time buyers won’t have to pay anything on house purchases up to £300,000) and that you’re confident you can afford it.

Why not start by comparing mortgage deals to help you work out if you can afford your dream house.