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Stamp Duty Surcharge – your questions answered

The 2016 Budget confirmed that the proposed 3% stamp duty surcharge will be going ahead. We've had lots of questions from concerned members about the new policy. Here are some answers.

What is the stamp duty surcharge?

It’s an additional 3% charge on existing rates, which can be seen in the table below


stamp duty surcharge

To calculate exactly how much stamp duty you will need to pay, use our free stamp duty calculator

When does it start?

The policy was announced in the Autumn Statement 2015 and was under consultation until February 2016. The surcharge will take effect on 1st April 2016.

If you’re in the process of buying and want to avoid the extra charges, you must complete (not just exchange) before midnight on 31st March 2016.

If contracts were exchanged on or before 25 November 2015 and the purchase completes on or after 1 April 2016, the higher rates will not apply.

Will I have to pay it?

If you’re buying an additional property to your main residence (a holiday home or buy-to-let investment, for example), you will have to pay the additional stamp duty.  See what to consider for buy-to-let purchases and buy-to-let mortgages.

It will also apply if the property you already own is overseas – even if you regard it as a holiday home.

How much will it be?

The additional 3% stamp duty will apply to the entire purchase of the property, in addition to the regular stamp duty bill. So you need to add an extra 3% on top of the stamp duty you may already have had to pay.

Use our free stamp duty calculator to find out how much you would usually pay.  You will then need to add 3% of the purchase price to the figure to see how much you will need to pay.

What if the home I’m buying is my main residence or I don’t sell my previous home straight away?

If the home you are buying is replacing your main residence, then the additional 3% stamp duty will not apply.

However, if you move out of your main residence but keep it and buy another main residence, you will have to pay the 3% stamp duty surcharge initially.

If you sell the first home within 3 years of completing on the purchase of the new home, HMRC will make a full refund.  But you need to pay the 3% surcharge upfront and on completion.

What if I’m buying with a partner who already owns a home but I don’t?

Unfortunately, even if only one of you owns a home, you will still need to pay the extra 3% on a second property.

What if my partner and I are separated?

The government will consider married couples who are separated and living in circumstances that are likely to become permanent, as divorced for the purposes of applying the higher rates.

What if I inherit my home?

Stamp duty does not apply to inherited homes. However, if you then go on to buy a second property without selling the inherited property first, you will have to pay the additional stamp duty.

Is there any way I can avoid the surcharge?

Omitting information about the property you own to your solicitor is fraud and could result in penalties a lot worse than the additional stamp duty charges.

All major property investors will be liable to pay the surcharge, too.

You won’t have to pay the additional stamp duty on homes worth less than £40,000, or on caravans, mobile homes or houseboats.

Our view

Doing away with the exemption for investors with larger property portfolios is fairer and should raise more money which can be ploughed back into housing to help struggling families and the next generation.

The stamp duty surcharge should be a great lever to help those wanting to buy a home to live in. But the government hasn’t listened to the concerns of both existing and aspiring home owners and are pushing ahead with introducing an overly complicated system that could harm the very homeowners they are trying to help.

Homeowners will have now 3 years instead of 18 months in the initial proposal to claim back the surcharge if they sell their original home. But it is crazy for the government to insist that the 3% extra is paid upfront. This will hit those thinking of downsizing as they will need to find additional thousands of pounds to complete their move.

We don’t understand why the government is making a hash of implementing these changes for what is otherwise a popular policy. Buying and selling property is messy, costly and can take ages – the way the government is introducing this stamp duty reform will just make things worse.


Leave a comment (23)* Required

  1. HarshHarsh

    Hi There,
    Me and my wife own a property. My wife has agreed to transfer ownership from joint to sole in her name. Once mortgage and ownership are fully transferred in her name would i need to pay additional stamp duty (if I buy property just in my name).

  2. MartinMartin

    Hi I’m buying a house with my wife we have been in rented accommodation, i Bought a house with an ex partner Many years ago who still Lives in it. I haven’t lived there or had anything to do with the house and signed a form of no interest in the property over 10 years ago. Do I have to pay the higher rate for stamp duty.?

    • HomeOwners AllianceHomeOwners Alliance

      Dear Martin – If you name is still on the documentation then you may well have to pay the higher rate. However, you should check this out first and possibly get some tax advice. You can get a free call to a tax adviser if you become a member

  3. MarkMark

    Me and my wife bought flat with my parents in Spain, each person has 25%. They live there and pay mortgage. Last seven years we lived renting properties in London saving money to buy our home. Are we still liable for additional stamp duty?

  4. David MDavid M

    Hi. I’m separated from my wife and moved out the family house (of which I own) almost 4 years ago. She has now agreed to buy me out which will allow me to buy somewhere else. The catch is i also own a flat that i rent out. The house was/is my main residence even though i haven’t lived there for years ……despite owning it. Will I have to pay the additional 3% stamp duty when I come to buy a house? Thanks

    • HomeOwners AllianceHomeOwners Alliance

      Dear David – It might be the case that you have to pay the 3% stamp duty at least initially but you may be able to claim it back at a later date. Please consider joining the HomeOwners Alliance as part of the membership benefits you would get a free legal call to discuss stamp duty options

  5. Gordon HGordon H

    Could anyone advise. I purchased a buy to let property second home in 2012 for £124,995, if I had of purchased the lease at that time for £4000, how much stamp duty would I have had to pay? any help would be greatly appreciated.

    • Chandni SahniChandni Sahni

      Hi Gordon, thanks for getting in touch with your question. Do consider becoming a member, we’d be happy to help. In the meantime, you may wish to call the HMRC stamp duty land tax helpline for help with your query. They can be contacted on 0300 200 3510

  6. TrishTrish

    My son & his wife bought a house in Sheffield in 2007 & in 2013 they went to work abroad & so let the house. They returned last year to jobs in Southampton & so have not lived in the Sheffield house since 2013.The Sheffield house is on the market & they are buying a house in Southampton which looks as if it will complete before the Sheffield house is sold. We know they will have to pay higher rate stamp duty on the new purchase but will they be able to claim it back when the Sheffield house is sold even though they haven’t lived in it for the last three years?

    • Sara HindSara Hind

      Hi Trish, there are certain tests to be met to work out if the stamp duty can be reclaimed. Their conveyancer is best placed to work this out for them.

  7. StephenStephen

    Hello 2 years ago I moved out of my main residence into another which has incurred the 3% surcharge. I have had the previous property on the market since I have moved out however I am struggling to sell it due to its location. I am looking at moving again will I have to pay the 3% surcharge again as I still have the original property.

  8. LorraineLorraine

    Hi I am selling my home and buying another one at the same time. I also own another property. Will I be charged the higher rate stamp duty

    • Sara HindSara Hind

      Hi Lorrianne, thanks for getting in touch with your question. We don’t have quite enough information to answer it. Do consider becoming a member, we’d be happy to help. In the meantime, you may wish to call the HMRC stamp duty land tax helpline for help with your query. They can be contacted on 0300 200 3510.

  9. Mark RadcliffeMark Radcliffe

    In the armed forces and have rented my first property out for 7 years which I also pay service charge and ground rent on. I will never move back into this property. If i buy a new house to live in when leave army will I have to pay the 3% stamp duty?

    • Sara HindSara Hind

      Hi Mark, are you asking if you’ll be considered a first time buyer for Stamp Duty relief? If you own the property that you rent out, then you would not be considered a first time buyer for stamp duty purposes.

  10. davedave

    I have divorced my ex wife but am stuck on the mortgage, I have divorce papers to say I have no entitlement to the old family home so my question is – if I buy a new house with my new partner will it be classed as a second home as i’m on old family home mortgage ? (like I said i have divorce papers saying I have no claim to it)

    • Sophie KhanSophie Khan

      Dear Dave,

      Do consider becoming a member and we’d be happy to assist you further, your membership entitles you to one free call to a legal advisor per year and we can put you in touch with a tax specialist lawyer.

      many thanks,

      HomeOwners Alliance

  11. AdamAdam

    Hello. My girlfriend and I both own flats (one each). My girlfriend is moving into my flat, and will be renting hers (after changing it to a buy-to-let). My flat will then become the ‘main residence’ for both of us. At some point in the near future, I will sell my flat, in order to buy a new home for the both of us. My girlfriend will still own her old flat, which will be rented. Will we have to pay the surcharge stamp duty?

  12. susansusan

    I own my own house and have lived in it for 20 years. I also own a property which I let out. I intend to sell my main house and purchase another to live in – am I correct in assuming that the additional property stamp duty surcharge will not apply.

  13. NicolaNicola

    I own my own home soley in my name. My boyfriend recently moved in after the sale of his home. He is now purchasing a new home solely in his name. I am looking at renting my house out and moving in with my boyfriend it his new house. Does he still have to pay the higher rate stamp duty on his new purchase?

  14. JamesJames

    Hi, I have recently sold my property and am about to purchase a new one. I own a property abroad, which I inherited from my parents several years ago – which I co-own with my sister -and which I have kept vacant so as to be able to sell it more quickly when I need help to repay my mortgage. Do I need to pay the extra 3% on the stamp duty?

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