When budgeting for a house purchase, it’s easy to focus entirely on the deposit and forget about stamp duty, an upfront tax that can add thousands of pounds to your total cost. Here’s exactly what it is and how it’s worked out.
What Is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax paid to HMRC when you buy residential property or land in England or Northern Ireland, above certain price thresholds. It’s a one-off payment made at the time of purchase, not an ongoing cost.
How Much Is Stamp Duty?
Stamp duty isn’t a single flat percentage of your property’s price. Instead, it’s charged in bands, similar to how income tax works, only the portion of the price within each band is taxed at that band’s rate.
For a standard home purchase in England or Northern Ireland:
| Portion of Price | Rate |
|---|---|
| £0 – £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
| Over £1,500,000 | 12% |
First-Time Buyer Relief
If you’re a first-time buyer, you get a more generous nil-rate band:
- £0 – £300,000: 0%
- £300,001 – £500,000: 5%
Important: if the property costs more than £500,000, this relief doesn’t apply at all, you’d pay standard rates on the full price instead. It’s a cliff edge, not a gradual reduction. Also, every buyer on the purchase must qualify as a first-time buyer for the relief to apply, if even one person already owns (or has owned) property, the whole purchase loses the relief.
Buying an Additional Property? The Surcharge
If you’re buying a second home or a buy-to-let property, an extra 5% surcharge is added on top of the standard rate in every band. This applies whether or not you’re also selling another property, though specific rules exist around replacing your main residence, worth checking your exact circumstances with a solicitor if this applies to you.
A Worked Example
A standard buyer purchasing a £500,000 home:
- 0% on the first £125,000 = £0
- 2% on the next £125,000 (£125,001–£250,000) = £2,500
- 5% on the remaining £250,000 (£250,001–£500,000) = £12,500
- Total: £15,000
A first-time buyer purchasing a £400,000 home:
- 0% on the first £300,000 = £0
- 5% on the remaining £100,000 (£300,001–£400,000) = £5,000
- Total: £5,000
When and How Do You Pay It?
Stamp duty is due within 14 days of completion. In practice, your solicitor or conveyancer usually calculates and pays it on your behalf as part of the purchase process, so you’re not typically dealing with HMRC directly yourself.
Scotland and Wales Are Different
Stamp Duty Land Tax only applies in England and Northern Ireland. Scotland has its own Land and Buildings Transaction Tax (LBTT), and Wales has Land Transaction Tax (LTT), each with different bands and rates. If you’re buying outside England or Northern Ireland, these figures won’t apply to you.
Work Out Your Own Stamp Duty
Rather than working through the bands by hand, our free Stamp Duty Calculator works it out instantly, with a clear breakdown showing exactly how your total is built up.
Try the Stamp Duty Calculator →
Common Questions
Can stamp duty be added to my mortgage?
Some lenders allow this, but it means paying interest on your stamp duty for the life of the mortgage, which can significantly increase the total cost compared to paying it upfront if you’re able to.
Is stamp duty tax-deductible?
No, not against your income. If the property is an investment (like a buy-to-let), stamp duty may be added to your costs when calculating Capital Gains Tax if you later sell, worth discussing with an accountant for your specific situation.
Do I pay stamp duty on a shared ownership property?
Rules here can differ depending on how you structure the purchase, it’s worth getting specific advice from your solicitor, since shared ownership has its own particular stamp duty treatment.
This guide is for general information only and does not constitute financial or tax advice. Stamp duty rates and thresholds can change; always check current rates before relying on this for a real purchase.
Related planner: Stamp Duty Calculator
Related guide: How Much Deposit Do You Need to Buy a House in the UK?