Comprehensive Guide to Stamp Duty

Laura Broad[1]

Laura Broad

Money Savings Advice Stamp duty

Whenever you buy a house, there are additional fees to take into consideration. You won’t simply be paying the amount that’s on the for sale board - there are solicitor fees, legal fees and moving costs to take into account. Tax to be paid to the government is no exception.

What Is Stamp Duty?

Stamp duty is a tax paid when buying property or land. It's called a transaction tax in Scotland and Wales. It's charged as a percentage of the property cost, starting at 3% for homes up to £500,000. First-time buyers are exempt up to £300,000.

This tax is known as stamp duty in the UK. If you’re buying a property over a certain value or it’s not your first time buying a property, paying stamp duty is inevitable.

This guide looks at what stamp duty is and how much of it you have to pay when buying a new house.

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What Is Stamp Duty?

Stamp duty is a form of tax you pay when you buy property or land. In Scotland and Wales, you may hear it called ‘land buildings transaction tax’ or simply ‘transaction tax’. While the names are different, they mean the same thing - a tax lump-sum that’s due when you pay over a certain amount for property or land.

How Is Stamp Duty Calculated?

Stamp duty is as a percentage of the amount you pay for your property. This rate increases as the value of the property increases. First-time buyers are exempt from paying stamp duty up to a certain property price. You pay a higher rate of stamp duty if you are buying a home in addition to your main residence such as a second home, holiday home, or a buy-to-let.

How Much Is Stamp Duty in the UK?

Stamp duty varies depending on where you’re buying in the UK. The rates in England and Northern Ireland are the same, but Scotland and Wales have different rate bandings.

The government can also change the stamp duty rates at any time. While it’s rare that is favours buyers, there are cases where it’s worked out well.

For example, between 8th July 2020 and 31st March 2021 governments across the UK introduced reduced stamp duty rates as an attempt to stimulate the housing market in response to the COVID-19 pandemic. This means that the threshold at which you start paying stamp duty rose significantly. In England and NI, for example, you don’t pay stamp duty if you’re a buying a main residence under £500,000 until 31st March 2021.

The stamp duty rates during this 8th July 2020 to 31st March 2021 period in England and Northern Ireland are as follows:

Purchase PriceMain Residence RateAdditional Property Rate
£40,000 - £500,0000%3%
£500,001 - £925,0005%8%
£925,001 - £1.5 million10%13%
Over £1.5 million12%15%
Numbers correct as of August 2020 as checked by Money Advice Service.

It’s also worth noting that you only pay the stamp duty tax on anything within the threshold - not the total property value. Someone buying a main residence of £600,000 would only pay 5% on the £100,000 that takes it over the minimum threshold - adding up to £5,000.


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Stamp Duty in England and Northern Ireland From 1st April 2021

Purchase PriceMain Residence RateAdditional Property Rate
£40,000 - £125,0000%3%
£125,001 - £250,0002%5%
£250,001 - £925,0005%8%
£925,001 - £1.5 million10%13%
Over £1.5 million12%15%
Numbers correct as of August 2020 as checked by Money Advice Service.

Stamp duty rates will be different for properties bought in Scotland and Wales. Check the Scottish Government website or the Welsh Government website for more information on transaction tax if this applies to the property you’ve got your eyes on.

How and When Do You Pay Stamp Duty?

In England and Northern Ireland, you now only have 14 days from the date you complete the sale and get the keys to your new place in your hands. Even if your property is under the threshold for stamp duty, you might still need to submit a return.

In reality, this is rarely something you need to sort yourself. It usually falls to your solicitor to arrange and some may even request you pay the funds before completion anyway. Even if this is done for you, it’s still your responsibility to check it’s been paid correctly and on time.

It's also possible to add stamp duty onto your mortgage. But this means you have to borrow more. Borrowing a couple of thousand pounds extra might not seem like a big deal on top of a mortgage, but over a 25-year term, the interest can add up and cost you significantly more.

What Happens if There’s a Delay When You Move?

Financial products like bridging loans make it easier to buy a new property before the sale of yours has gone through. If you end up in this position, you may end up technically owning two properties at once. This means you will have to pay the higher stamp duty rates.

However, if you then can sell your old home within three years, you can apply for a refund on your higher stamp duty payments. There are also some exceptions if it's taken you over three years that are worth checking out in the Government's stamp duty refund guidance.

Circumstances Where Stamp Duty Can Be Reduced

There a few special circumstances in which you don't need to pay stamp duty, or you can reduce the amount you pay.

Property Is on the Value Threshold

If the property you want to buy is just over the threshold that would take you into a bigger band of stamp duty, it's always worth asking the seller if they would accept a slightly lower price. Negotiating a couple of thousand pounds at this stage can save you much more than that in the stamp duty, you then wouldn't need to pay if they accepted.

Transfer of Deeds or Transfer of Property

You don't pay stamp duty if the deeds of a home are transferred to you and no money changes hands. Transfer of deeds is possible where houses are given as a gift or left in a will. You also don't pay stamp duty if a proportion of a property's value is transferred over to you as a result of a separation or divorce. This is known as a transfer of property.

Alternative Property Arrangements

Stamp duty isn't paid in the same way in some special property arrangements, such as some Sharia-law-compliant home purchase plans. This is down to differences in how Islamic financing works and how interest-based lending may not appeal to some follows of Islam.

The nitty-gritty details of this can be discussed with a financial advisor if this applies to you.

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Money Savings Advice Author Laura Broad

Laura Broad

Laura is a professional content writer and learning designer, passionate about empowering people through straightforward, jargon-free content. When she's not reading or writing about all things personal finance, you can find her in the gym, barbell in hand.

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