Stamp duty when you buy a home
Stamp Duty Land Tax is a tax on the purchase, not part of your legal fee. Your conveyancer works out what you owe, files the return and pays it for you, but the money is yours and it is due on completion.
It applies in England and Northern Ireland. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax, with their own bands. The figures below are the SDLT ones, so check the right regime for where you are buying.
The standard rates
SDLT is charged in slices, not as a single percentage of the whole price. You pay each rate only on the portion of the price that falls in that band.
| Portion of the price | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Above £1.5 million | 12% |
So on a £300,000 purchase you pay nothing on the first £125,000, 2% on the next £125,000, and 5% on the last £50,000. Not 5% on £300,000.
First-time buyer relief, and the cliff edge
If you are a first-time buyer you pay nothing up to £300,000 and 5% on the portion between £300,001 and £500,000.
Above £500,000 the relief is not tapered. It is gone, and the standard rates apply to the whole price. That makes the step between £500,000 and £500,001 worth several thousand pounds, and it is worth knowing about before you make an offer rather than afterwards.
Everyone buying has to be a first-time buyer for the relief to apply. If one of you has owned a property before, anywhere in the world, the purchase does not qualify.
The surcharge on an additional property
If buying this property means you will own more than one residential property, you pay an extra 5% on top of the standard rates, across the whole price.
That catches more people than just landlords. It applies if you are buying before selling, if you are helping a child buy and going on the title, and if you own a share of a property you inherited.
The relief that matters here is for people replacing their main home. The surcharge does not apply if the new property replaces your main residence and you sold the old one within 36 months of completing the purchase. But if you have not sold on the day you complete, you have to pay the higher rates up front and reclaim them once the sale goes through. Budget for that, because it is real money leaving your account at exactly the point everything else is.
When it is actually due
The return and the payment are due within 14 days of completion. In practice your conveyancer files and pays on the day of completion, out of the funds you have sent them, so the deadline rarely becomes your problem. If you are not using a conveyancer, filing and paying is on you.
This is also why your completion statement is larger than your quote. The quote covers the legal work. The stamp duty sits on top, as does the deposit and the Land Registry fee. How much conveyancing costs sets out which is which.
Non-residential and mixed use
Commercial property, bare land and genuinely mixed-use buildings run on a separate set of non-residential rates, which are lower at the top end and have no surcharge. Whether a property counts as mixed use is a question of fact rather than preference, and HMRC has challenged a good many optimistic claims. If someone suggests your purchase qualifies, get that confirmed by someone who will put their name to it.
Frequently asked questions
Does the seller pay any stamp duty?
No. It is a tax on the buyer. If you are selling and buying at the same time, it is calculated on the property you are buying only.
Can I add stamp duty to my mortgage?
Not directly. Lenders advance against the property’s value and the tax is not part of the purchase price, so it has to come from your own funds. Some people borrow slightly more against the property to free up cash elsewhere, which is a conversation for a mortgage adviser rather than your conveyancer.
What if the price changes after I have had a quote?
The tax recalculates on the actual price paid, so a renegotiation after a survey changes the SDLT as well. Tell your conveyancer the moment a price moves. See what searches cover for the other findings that commonly trigger a renegotiation.
Rates and thresholds change at budgets, so confirm the current figures on GOV.UK before you rely on a number. For the legal side, you can compare conveyancing quotes with the fee, VAT and disbursements broken down.