Complete Guide to Stamp Duty

What is stamp duty?

‘Stamp Duty Land Tax’ (otherwise known as Stamp Duty), is a one-off tax you have to pay when buying a property in England and Northern Ireland. Homebuyers in Scotland pay ‘Land and Buildings Transaction Tax’ and in Wales ‘Land Transaction Tax’ instead.

Stamp duty is charged as a percentage of the amount paid for the property when it’s bought or transferred. So how much you’ll pay will depend on how much you’re paying for the home.

How much stamp duty will I have to pay?

If you’re a first time buyer, the 0% threshold is currently £425,000 if the property you’re buying is worth £625,000 or less.

For all other buyers, you’ll need to pay stamp duty on homes worth over £250,000. How much you get taxed rises with the property value:

You’ll need to pay your stamp duty within 14 days of completing your property purchase. If you miss the deadline, HMRC may charge penalties and interest.

What’s the stamp duty on second properties?

As the table above shows, you should expect to pay a higher rate of stamp duty with a second home - this includes buy-to-lets. Since the 31st October 2024, the additional surcharge rate for stamp duty on second homes is 5% on top of the standard rate.

However, if you sell your main residence and move into your second property within three years, you can claim this stamp duty back. 

What’s the stamp duty rate for first-time buyers?

If you’re a first-time buyer, you can currently take advantage of a 0% threshold of £425,000 on properties valued at £625,000 or less.

If the property you’re looking to buy is worth more than £625,000 then the £250,000 threshold will apply, increasing your overall Stamp Duty tax liability.

If you’re buying with someone else, then you’ll both need to be first-time buyers to take advantage of this discount. Don’t forget, you’ll still need to complete what’s called an SDLT Stamp Duty Land Tax return, even if you don’t have anything to pay. It’s just a process - your Haysto Mortgage Expert can help you with this.

Are companies liable for Stamp Duty?

Yes, they could be. Since 31st October 2024, any company or ‘non-natural person’ purchasing a residential property worth £500,000 or more will pay Stamp Duty at a single rate of 17% (up from 15% previously).

Upcoming changes to Stamp Duty thresholds

From the 1st April 2025, the standard Stamp Duty thresholds will be changing as follows:

For first-time buyers, the 0% threshold will reduce to £300,000 (down from £425,000) on properties valued at £500,000 or less (down from £625,000 or less).

The overall effect of these changes will mean a potential increase in the stamp duty payable across the board as the thresholds have reduced for both home movers and first-time buyers. For additional home purchases, the surcharge rate increase to 5% (up from 3% previously) has already been implemented.

Are there any exemptions for stamp duty?

There are a few circumstances where you might not have to submit a SDLT return:

• No money actually changed hands, for instance if the property was gifted to you (though this doesn’t apply if you swapped houses with someone else)

• If the home was left to you in someone’s will

• If the home was transferred to you after a divorce or separation

• You bought the property for less than £40,000 

• You bought a new lease of seven years or more (as long as it cost less than £40,000 and the annual rent is less than £1,000)

• You used alternative arrangements to finance the purchase i.e. religious laws