How much is stamp duty and when do I pay?
This tax on home buyers is one of the major costs you'll need to factor in when budgeting for your new property. Whether you're a first-time buyer or you're moving house, we take you through everything you need to know about stamp duty, how much it costs and when you need to pay.
1. What is stamp duty and who pays it?
- Stamp duty, or Stamp Duty Land Tax if you want to use the official jargon, is a levy that you pay to HM Revenue & Customs when you are buying a home.
- It is always the home buyer that pays stamp duty and not the seller.
- You will have to pay stamp duty if you are buying a property for over £125,000, whether it is leasehold or freehold (See Table 1 below for the rates and thresholds that apply).
- If you’re a first-time buyer, you are exempt from paying any stamp duty so long as the property costs less than £300,000.
- If you are a first-time buyer purchasing a property for between £300,000 and £500,000, you will still benefit from the relief as you won’t have to pay any stamp duty on the first £300,000. However, you’ll be taxed at 5% on the remainder.
- If you are a first-time buyer purchasing a property for over £500,000 you won’t get any benefit from the new relief and will have to pay the standard stamp duty charge (see Table 2 below).
- If you are buying an additional property as a second home or a buy-to-let you’ll have to pay a stamp duty surcharge of 3% on top of the standard rate.
2. How much stamp duty do I have to pay?
The rate of stamp duty you pay depends on what price threshold your property falls into. It also depends on whether you qualify for stamp duty relief as a first-time buyer or whether you have to pay a surcharge because you are purchasing a buy-to-let or second home.
The table below sets out the stamp duty thresholds and rates that apply. The first column shows how much you need to pay if you have bought a home before and have to pay the standard rate of stamp duty. In the second column you will see how the stamp duty surcharge will affect you if you are purchasing a buy-to-let or additional property. In the second table you can see the rates that apply if you’re a first-time buyer.
Table 1: Standard stamp duty thresholds and surcharge for extra properties
|Purchase price of property||Stamp duty rate||Stamp duty rate for additional properties|
|Up to £40,000||0||0|
|Over £40,000 – £125,000||0||3%|
|Over £125,000 to £250,000||2%||5%|
|Over £250 to £925,000||5%||7%|
|Over £925,000 to £1.5 milion||10%||13%|
|Over £1.5 milion||12%||15%|
Table 2: Stamp duty relief for first-time buyers
|Purchase price of property||First time buyer stamp duty rates|
|Up to £300,000||0|
|Over £300,000 to £500,000||5%|
|Over £500,000||Normal stamp duty rates apply|
3. Stamp duty calculator
Stamp duty is calculated in the same way income tax works. For example, if the agreed price of a home being purchased by an existing homeowner is £375,000, stamp duty is calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £125,000 = £6,250
Total stamp duty payable = £8,750
For a first-time buyer, the purchase of a home worth £375,000 is calculated as follows:
0% on the first £300,000 = £0
5% on the next £75,000 =£3,750
Total stamp duty payable = £3,750
To calculate exactly how much stamp duty you will need to pay, use our free stamp duty calculator
4. Do I qualify for first-time buyer relief?
The definition of a first-time buyer in relation to stamp duty relief is quite strict. In order to benefit from this tax reduction, you must never have owned or part-owned a property before either in this country or abroad. If you are buying with a partner who has owned a home before, unfortunately you will not qualify. The same is true if you are buying jointly with your parents and they have owned a home. You will also be disqualified from the relief if you have previously inherited a share of a home.
5. What stamp duty rates apply to leasehold homes?
In most cases, you will pay stamp duty on the purchase price of a leasehold home at the standard rates. But, if you are buying a brand new property which has a new lease, or an older property that has just been divided up and therefore new leases have been issued (known as ‘unassigned leases’), you may need to pay an additional stamp duty charge. This 1% extra charge o will only apply if the total value of the rent you have to pay over the lifetime of the lease exceeds £125,000. HMRC has a calculator on its website which you can use if you think this charge might apply to your purchase.
6. Does stamp duty apply to fixtures and fittings?
- Stamp duty does NOT apply to removable fixtures or “chattels” like freestanding furniture, carpets or curtains. But it does apply to fixtures and fittings like bathroom and kitchen fittings, and built in wardrobes, which are attached to the building
- You can reduce your stamp duty bill by subtracting the value of removable fittings from the total price of the property. For example, if carpets are included in the sale of a flat, the buyer and seller must agree a realistic price which reflects their age and quality, and then subtract it from the total price to calculate the stamp duty
- Buyers have been known to try to reduce their stamp duty bills by massively exaggerating the value of fixtures, but the HMRC has cracked down on this. You should expect to be able to justify the value of the fixtures to the taxman
7. Are there any other exceptions?
- Homes registered to companies rather than individuals and cost more than £500,000 have a rate of 15%
- Charities may be able to get relief from stamp duty when they buy land and property for charitable purposes
- Right to Buy transactions may qualify for stamp duty discounts
- A relief from stamp duty may be available where a registered social landlord buys land and property
- Zero-carbon homes (including flats) under £500,000 are exempt from stamp duty. Zero-carbon homes over £500,000 have their stamp duty bill reduced by £15,000
- A full list of stamp duty exemptions and reliefs are listed on the HMRC website here.
8. When do I have to pay stamp duty?
You have to pay within 30 days of the day on which you are entitled to take possession of your new house. You still have to submit a return even if you are not due to pay any stamp duty on the purchase price of your property, unless the property costs less than £40,000. Your solicitor or conveyancer should ensure that you do not miss the deadline.