How Does Stamp Duty Work?

How does stamp duty work?

Stamp Duty Land Tax (SDLT) is a tax paid by the buyer when buying property or land in England and Northern Ireland. It works in bands, like income tax. You pay a different rate on each part of the price, not one flat rate on the whole amount. Your solicitor handles the calculation and payment within 14 days of completion.

The buyer pays it, not the seller. Your solicitor usually handles the payment as part of the conveyancing process. You have 14 days from completion to file and pay.

On timing, SDLT is paid in cash, within 14 days of completion, and it cannot normally be added to the loan. It sits alongside your deposit and legal fees, not inside what your mortgage covers. Also, the Bank of England base rate moves what a mortgage costs you every month. It has no effect on the stamp duty bill, which is fixed by the price you agree to pay.

What are the current stamp duty rates in England?

Standard residential buyers in England pay 0% on the first £125,000, 2% from £125,001–£250,000, 5% from £250,001–£925,000, 10% from £925,001–£1.5m, and 12% above £1.5m. These thresholds took effect on 1 April 2025 and are still the rates for 2026/27. Each rate applies only to the part of the price in that band, not the full price.

This table covers standard residential purchases (moving home, not a first-time buyer, not a second property):

Example: buying a £300,000 home. You pay 0% on the first £125,000 (£0), 2% on the next £125,000 (£2,500), and 5% on the remaining £50,000 (£2,500). Total: £5,000.

Do first-time buyers pay stamp duty?

First-time buyers in England pay 0% SDLT on the first £300,000 of the price, and 5% on the part between £300,001 and £500,000. Properties above £500,000 do not qualify for the relief. Standard rates apply in full. Every buyer on the purchase must be a first-time buyer for the relief to apply.

First-time buyers get a discount, but the thresholds went back in April 2025 after a temporary holiday period:

To qualify, you must never have owned property anywhere in the world before. Every buyer on the purchase must also be a first-time buyer. This catches couples out. If one of you has owned a home before, the whole purchase loses the relief, not just half of it.

Example: a first-time buyer purchasing a £400,000 flat pays 0% on the first £300,000 and 5% on the next £100,000, a total of £5,000. That saves £5,000 compared with standard rates.

The relief used to be more generous. Until 31 March 2025 the nil-rate band for first-time buyers was £425,000 and the maximum qualifying price was £625,000. Both dropped on 1 April 2025 to the £300,000 and £500,000 figures above.

Note the cliff edge at £500,000. Relief is not tapered. At £500,000 you get it. One pound over, you lose all of it and pay standard rates on the whole purchase.

How does the Lifetime ISA price cap fit with stamp duty relief?

They do not line up, and that is the trap. Stamp duty first-time buyer relief stops at £500,000. But a Lifetime ISA can only be put towards a first home costing £450,000 or less. So for properties between £450,001 and £500,000, you still get the stamp duty relief, but your LISA money cannot be used for the purchase.

Taking money out of a LISA for a home above that £450,000 cap is not blocked. But it counts as an unauthorised withdrawal and triggers the 25% withdrawal charge. That charge takes back more than the government bonus put in. The Lifetime ISA withdrawal rules also say at least 12 months must have passed since the first payment into the account before it can be used on a first home.

Do I pay extra stamp duty on a second home?

Yes. Buying a second home, a buy-to-let property, or any additional residential property in England attracts a 5 percentage point surcharge on top of standard SDLT rates at every band. This applies even to low-value properties. It applies regardless of where in the world the buyer’s existing property is located.

If you buy a second home, a buy-to-let property, or any additional residential property, you pay an extra 5 percentage points on top of the standard rates at every band. The surcharge rose from 3% to 5% for transactions completing on or after 31 October 2024. Older guides and calculators showing 3% are out of date.

Because it applies at every band, the surcharge starts from the very first pound. The 0% band becomes 5%, the 2% band becomes 7%, and so on up the table.

Buyers who are not UK resident pay a further 2 percentage points on top of whatever rate would otherwise apply, including on a first or only home.

There is a limited exemption if you are replacing your main residence. The higher rate does not apply if you sell your previous main home within 36 months of completing the new purchase. If you have not sold it by completion, you can claim a refund once you do.

Stamp duty is only the entry cost of an additional property. When you eventually sell one, the profit falls outside the main-home exemption. So Capital Gains Tax is charged on the gain as well.

Does stamp duty apply in Scotland and Wales?

No. Stamp Duty Land Tax applies only in England and Northern Ireland. Scotland has its own Land and Buildings Transaction Tax (LBTT), and Wales has Land Transaction Tax (LTT). The rates, thresholds and reliefs differ in each nation. The rules that apply depend on where the property is located.

Stamp Duty is an England and Northern Ireland tax. Scotland and Wales have their own equivalents:

• Scotland: Land and Buildings Transaction Tax (LBTT), different rates and thresholds
• Wales: Land Transaction Tax (LTT), different rates and thresholds

If you’re buying in Scotland or Wales, check the relevant Revenue Scotland or Welsh Revenue Authority calculators.

What SDLT reliefs are available?

HMRC provides statutory reliefs that can reduce or remove SDLT in defined circumstances. The main ones are first-time buyer relief (for properties at £500,000 or less), mixed-use property relief (where a property has genuine residential and commercial use), and chattels deductions (for genuinely moveable fixtures excluded from the land price).

Here is how each one works:

• First-time buyer relief: a statutory reduction for buyers who qualify as first-time buyers and buy a property at £500,000 or less. It is claimed in the SDLT return, which the buyer’s solicitor or conveyancer files.
• Mixed-use property: HMRC applies lower non-residential SDLT rates where a property has a genuine mix of residential and commercial use. HMRC publishes guidance on what qualifies at gov.uk.
• Chattels: HMRC allows the purchase price to exclude fixtures and fittings that are genuinely moveable (‘chattels’), because they are not land. HMRC guidance says values must reflect open-market prices, and HMRC checks allocations that look inflated.

Full SDLT guidance, including all reliefs, is published at gov.uk/stamp-duty-land-tax.