What can you afford? - Conveyancing - Downsizing - First time buyer

What is stamp duty?

4 min read

Stamp Duty Land Tax can be one of the biggest costs in buying a house - but it’s not always payable for all buyers or properties. We answer the most common questions on stamp duty.

  • Kavi Chauhan Deputy Head of Conveyancing & Licensed Conveyancer
    Kavi Chauhan

    Deputy Head of Conveyancing & Licensed Conveyancer.

    Published July 27th 2023

first time buyers might not have to pay stamp duty land tax when buying a house

Stamp duty, or Stamp Duty Land Tax (SDLT), is a government tax which is paid by the buyer of a property, as a lump sum on completion. It is paid by people who are purchasing a property or land over a certain price bracket. Find out more about Stamp Duty Land Tax and the varying thresholds below.

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Who pays Stamp Duty Land Tax?

If you’re purchasing a property or land over a certain price in England and Northern Ireland you may have to pay stamp duty. It’s the buyer’s responsibility to cover the stamp duty cost, not the seller, and so when purchasing a new home, you will need to factor SDLT into your budget.

What is stamp duty threshold?

In England and Northern Ireland, no stamp duty is due on the first £250,000 of a residential property (provided it's your main residence and isn't a second home / additional property) and for non-residential land and properties it is £150,000. However, if you are a first time buyer, there is a higher threshold of up to £425,000.

How much is stamp duty?

The amount you’ll pay in stamp duty depends on its value, location and whether you’re buying a main or a second home.

On the 23rd September 2022, Chancellor Kwasi Kwarteng announced a permanent change to the stamp duty thresholds, reducing the tax for residential properties in England and Northern Ireland. This update also included an increase to the threshold for first-time buyers to £425,000. The figures below reflect these latest updates.

Main residence stamp duty rates

The below table shows stamp duty rates for main residences in England:

Proportion of property valueRate for main residence
Up to £250,0000%
£250,001 to £925,0005%
£925,001 to £1.5 million10%
Over £1.5 million12%

First-time buyer stamp duty

If you’re a first-time buyer you won’t have to pay any tax on properties up to £425,000.

If the cost of the property you’re buying is up to £625,000 you’re also eligible for discounted rates. However, if you’re purchasing a house that costs more than this, you won’t benefit from the first-time buyer exception.

Remember, to be eligible, you, and anyone you’re buying with, must be first-time buyers.  

First-time buyer stamp duty rates

The below table shows stamp duty rates for first-time buyers:

Proportion of property valueRate for first-time buyers
Up to £425,0000%
£425,001 to £625,0005%

For example, if you’re a first-time buyer looking to buy a £525,000 house in England, you’ll start paying SDLT at £425,000. Your total charge would be £5,000.

Stamp duty rates on second homes

If you’re buying an additional property, your main residence might be liable for the surcharge.

The below table shows stamp duty rates for additional properties in England and Northern Ireland:

Proportion of property valueRate for additional properties
Up to £250,0003%
£250,001 to £925,0008%
£925,001 to £1.5 million13%
Over £1.5 million15%

Stamp duty on shared ownership

If you’re buying a house through a shared ownership scheme, you can either pay SDLT in stages or make a one-off payment, known as market value election. With the latter, you’ll pay SDLT based on the full price of your home ­– rather than just the premium you’re paying for the share you’ll own– with nothing to pay if the value goes up in the future. If you choose to pay in stages, you’ll pay a higher rate of SDLT if your property increases in value when you come to buy further shares.

How and when do I pay stamp duty?

Your conveyancer will submit the SDLT return on completion of your purchase and pay the tax due to HMRC on your behalf. You’ll need to pay an administration fee to cover the paperwork, whether tax relief is applied or not.

Your conveyancer has 14 days to file a SDLT return and pay any due, to avoid penalties and interest, therefore it’s likely they will request payment before the purchase has completed.

Are there any exemptions?

As well as first-time buyer exemption, you may be able to get stamp duty relief for multiple dwellings, compulsory purchases and right to buy properties. You can find the full reliefs and exemptions list on the government’s site.

Think you might be entitled to relief? Check the relevant terms and seek specialist tax advice to see if you meet the criteria.

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