Stamp duty explained

Getting an offer accepted on a home is a real cause for celebration, so the last thing you want is to be unprepared for the tax on your property – commonly known as Stamp Duty. Our guide will help you prepare so you don’t get caught out.

Published

12 Dec 2017

What is stamp duty?

Stamp Duty Land Tax, to give it its full name, is a tax you pay on any property bought in England, Wales and Northern Ireland. It’s calculated as a percentage of the sale value, but for residential homes, it only applies to those worth more than £125,000.

In Scotland it’s called Land and Buildings Transaction Tax, and it’s paid on properties worth more than £145,000.

Tax rates

To help you budget ahead, we’ve broken down the thresholds for Stamp Duty if you were buying a residential property in England, Wales or Northern Ireland, and Land and Buildings Transaction Tax if you were buying a home in Scotland.

dad and son playing in park

England, Wales and NI

Stamp Duty apples to properties over £125,000. Figures in this table are from gov.uk and correct as of April 2018. The rates are as follows:

0%2%5%10%12%
Purchase price up to £125,000 £125,001-£250,000£250,001-£925,000£925,001 - £1.5 millionOver £1.5 million

Scotland

Land and Buildings Transaction Tax applies in Scotland to properties over £145,000. Figures in this table are from gov.uk and correct as of April 2018. The rates are as follows:

0%2%5%10%12%
Purchase price up to £145,000£145,001-£250,000£250,001-£325,000£325,001-£750,000Over £750,000

How much tax will I pay?

It’s worth remembering that in England, Wales and Northern Ireland you only have to pay stamp duty on the portion of the sale that exceeds the threshold. So if you bought a house worth £300,000, you’d pay 0% on the first £125,000, then 2% on the next £125,000 (i.e., £2,500) and 5% on the remaining £50,000 (i.e., £2,500), making a grand total of £5,000.

In Scotland, Land and Buildings Transaction Tax works in a similar way to stamp duty, as you only pay it on the portion of the sale that exceeds the threshold. Keep in mind that the rates are different.

couple reading about stamp duty

If you’re buying a zero-carbon house or flat worth under £500,000, you won’t pay any stamp duty. If it’s worth over £500,000 the stamp duty bill will be reduced by £15,000.

Before you buy a home

It’s possible to check with the seller or your solicitor if it’s classed as a freehold or leasehold. This can make a big difference to your costs.

Stamp duty on second homes and buy-to-let properties

If you’re thinking about buying another house to live in or rent, you’ll pay an extra 3% in stamp duty. This is paid on any property value that exceeds the thresholds shown in the table below.

Figures in the table are from gov.uk and correct as of December 2017.

3%5%8%13%15%
Purchase price up to £125,000 £125,001-£250,000£250,001-£925,000£925,001 - £1.5 millionOver £1.5 million

Since April 2016, anyone buying a buy-to-let property or second home has had to pay an extra 3% in stamp duty.

How to pay stamp duty

Your conveyancer or solicitor will arrange your stamp duty payment as part of their conveyancing fees. You need to pay conveyancing fees in a lump sum, rather than instalments, and it can’t be added to your mortgage. Ask your solicitor or conveyancer if you’re unsure.

Stamp duty is paid once the house purchase is completed, although you’ll typically have to send the money to your solicitor or conveyancer just before this.

Be prepared before you buy

Stamp duty is a necessary part of your house purchase, but with a little forward planning and smart budgeting you should be able to cover it without any stress. Keep in mind that you’re almost in your new home and stay positive!

For a detailed breakdown of other things you might need to pay, check out our costs of moving house guide.

Important information

The content on this page aims to offer an informative introduction to the subject matter but does not constitute expert financial advice specific to your own situation. All facts and figures were correct at time of publication and were compiled using a range of sources.