Homebuyer FAQs: What is Stamp Duty?

Stamp Duty, officially called Stamp Duty Land Tax (SDLT), is a tax you pay when you buy property or land in England and Northern Ireland. Scotland and Wales have similar taxes called Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT).

You have to pay Stamp Duty if you buy a property over a certain price and the amount that you will have to pay depends on how much the property costs overall. Different parts of the price are then taxed at different rates. For residential properties, you don’t pay any Stamp Duty on the first £250,000 of the property’s value. For non-residential properties, this threshold is £150,000. 

For example, if you buy a house for £300,000, you pay no tax on the first £250,000, and then 5% on the remaining £50,000. This means you would pay £2,500 in Stamp Duty. If you are buying a second home or a buy-to-let property, you pay an extra 3% on top of the usual rates.

Some situations are exempt from Stamp Duty or qualify for a discount. For instance, if you transfer a property because of a divorce, you don’t have to pay Stamp Duty. Charities and some social landlords can also get special discounts. First-time buyers get a better deal and don’t pay Stamp Duty on properties up to £425,000. However, if you’re making a joint purchase, all of you must count as first-time buyers to qualify. 

The buyer is responsible for paying Stamp Duty, which must be done within 14 days of buying the property. Usually, your solicitor or conveyancer will handle this for you and make sure it's paid to HM Revenue and Customs (HMRC). In Scotland and Wales, the taxes work similarly but have different rates and rules. 

Stamp Duty can be a big part of the cost when buying a property, so it’s important to understand how much you’ll need to pay. Getting advice from a financial advisor or solicitor can help you prepare for these costs and advise if you qualify for any exemptions or discounts.

Disclaimer: The information provided in this blog post is for informational purposes only and does not constitute financial advice. While we strive to provide accurate and up-to-date information, individual circumstances may vary, and readers are encouraged to seek personalised advice from qualified financial advisors or mortgage brokers before making any financial decisions. We do not accept any liability for the consequences of actions taken based on the information provided herein.