Your guide to stamp duty rates

One of the most common questions we get asked is “How much is stamp duty?” Of course, it's only natural to want answers, especially as stamp duty can often be the most expensive part of your conveyancing fees.

We know that when buying a house there are all manner of things for you to think and maybe even worry about. Depending on your circumstances, stamp duty may or may not be something that applies to you but either way it's important you understand the ins and outs. So, let's get a little clarity on stamp duty rates, how much they are and who has to pay them.

What is Stamp Duty Land Tax?

Abbreviated to SDLT or stamp duty for short, Stamp Duty Land Tax is a tax paid by property buyers in England and Northern Ireland to Her Majesty's Revenue and Customs (HMRC). It is based on the value of property or land.

Wales has its own version, known as Land Transaction Tax (LTT). You can find out what the stamp duty rates are for buying a home or land in Wales in our guide to LTT, while the information provided below is for residential properties in England.


How much is stamp duty?

Stamp duty rates depend on the value of the land or property you are buying, and the amount is paid on a sliding scale. Until 30th June 2021 inclusive, the stamp duty threshold for residential properties is £500,000. That means if you're buying a home for less than that amount, there are no stamp duty costs for you to pay.

For any properties above £500,000, you will have to pay based on the value of the home above that threshold. So, if you were to buy a house for £600,000, you would pay tax at 5% on £100,000. 

These new stamp duty thresholds were first announced by Chancellor Rishi Sunak in July 2020. They are set to change as of 1st July 2021 and then again on 1st October 2021, so read on for further information.


What are the recent stamp duty changes?

Chancellor Sunak announced the stamp duty changes in a bid to help buyers who might be struggling financially in the wake of the coronavirus pandemic. The threshold was initially set to return to previous levels in March 2021, but a stamp duty holiday extension lasting until the end of June was announced. The stamp duty rates will eventually return to their pre-Covid levels, but this will be done gradually, as described below.

When does the stamp duty holiday end?

The stamp duty holiday officially ends on 30th June 2021. Between 1st July and 30th September, the stamp duty thresholds will change and there will be nothing to pay on properties up to a value of £250,000. On homes above that price, your stamp duty costs will depend on the band your property falls into. 

Previously, the stamp duty threshold started at £125,000. As of 1st October 2021, the stamp duty rates will return to those levels, and the table below shows what you can expect to pay on any properties above that value.

Purchase price of propertyStamp Duty costBuy to Let/Extra Home Rate*
- £125,0000%3%
£125,001 - £250,0002%5%
£250,001 - £925,0005%8%
£925,001 - £1.5 million10%13%
£1,500,000.01+12%15%

 

*Those purchasing a second home or a buy-to-let property must pay a higher amount of Stamp Duty Land Tax.


Who pays stamp duty?

Anyone buying a residential property in England worth more than the current £500,000 threshold will have to pay stamp duty. Exactly how much they pay will depend on the stamp duty band the home falls into.

Stamp duty exemptions do apply, but only to first-time buyers. This is known as first-time buyer stamp duty relief.

What is first-time buyer stamp duty relief?

Until 30th June 2021, the same stamp duty thresholds apply to first-time buyers as to everyone else. After that, first-time buyer stamp duty relief will mean that first-time buyers will not pay any tax on the first £300,000 of a property's value. For anything up to £200,000 above that amount, stamp duty rates will be set at 5%.

So, if from 1st July a first-time buyer purchased a house for £350,000 then they would owe £2,500 in stamp duty costs. For properties valued above £500,000, first-time buyers must pay stamp duty at the same rate as other property buyers.


How much stamp duty will I pay?

If you know the value of the property you are buying and when you are likely to complete your purchase, you can use the tables above to help work out your stamp duty costs. There are also a number of free tools available online that do the working out for you - we recommend this stamp duty calculator from the Money Advice Service.

To give you an example, let's say you are purchasing a property worth £400,000 and that you are not a first-time buyer.

  • If you complete by the end of June, you will pay nothing because your property price falls below the £500,000 stamp duty threshold.
  • If you complete between 1st July and 30th September, you will pay £7,500 in stamp duty costs. This is because you will be taxed at 5% on the £150,000 above the £250,000 threshold.

If you complete from 1st October onwards, you will pay £10,000 in stamp duty. This is because you will be taxed at 2% on the £125,000 above the first £125,000 threshold and taxed at 5% on the £150,000 above the next stamp duty band, which starts at £250,000.


Stamp duty is due once you have completed and you are the new owner of your home. Your solicitor will generally organise the payment, which is done online to HMRC. The deadline is 14 days after the purchase transaction has been finalised, and you could be charged penalties and interest if you are late in paying.

Even where you do not owe any stamp duty - either because you're a first-time buyer or the property's value is below the stamp duty threshold - you need to complete a declaration for HMRC. Your conveyancing solicitor will provide you with a stamp duty return and help you fill it out. While most solicitors will organise the payment of any outstanding stamp duty, it is your responsibility to ensure it is paid on time.

Can stamp duty be paid in instalments?

Paying your stamp duty in instalments will likely take you beyond the 14-day deadline, which means you risk incurring penalty charges.

Can you add stamp duty to your mortgage?

It is possible to add your stamp duty costs to your mortgage. However, it's important to understand that this will incur interest for the duration of the mortgage as well as affect your loan-to-value ratio.


Do you pay stamp duty when you sell a house?

No, anyone selling a property will not need to pay stamp duty costs on the value of that home. However, if they are buying another home to move into, they will be subject to stamp duty rates on that property.


Do you have to pay stamp duty on new builds?

Yes, you have to pay stamp duty on new builds, just as you do with any residential property. The date of construction has no bearing on the stamp duty rates or thresholds.


Expert help is just a call away

Hopefully now you have a fuller understanding of how stamp duty works, how much it might cost and how the changing thresholds may affect your plans. Of course, if you have any more questions about stamp duty rates, when it must be paid or anything else, the Homeward Legal team is here to help. All you have to do is pick up the phone and dial . We're open seven days a week and our experts are ready and waiting to speak to you.

Share this guide:

More from this category