What is Stamp Duty?

Stamp Duty is a tax on residential properties costing more than £250,000, unless you qualify for first time buyers relief.

How does Stamp Duty work?

There are several rate bands for Stamp Duty. The tax is calculated on the part of the property purchase price falling within each band.

This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.

How is Stamp Duty calculated?
 

It’s calculated in a similar way to income tax – you’ll pay on each part of the house’s value that falls into different bands. So, if you bought a house for £350,000, you’d pay:

  • 0% on the first £250,000
  • 5% on the next £100,000

= £5,000 in total.

These numbers are taken from www.gov.uk to show how the calculation works.

First time buyers' relief

If you're a first time buyer in England and Northern Ireland, you won’t have to pay Stamp Duty on the first £425,000 of a property's purchase price. You then pay 5% for any amount above £425,000 up to £625,000.

If the purchase price is over £625,000, you cannot claim the first time buyers discount.

Paying Stamp Duty
 

When do you have to pay Stamp Duty?

You have 14 days to pay it after completion. Your conveyancer should handle the payment to HMRC, but it’s worth checking. If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.
 

Can you add Stamp Duty to a mortgage?

Yes, you can add Stamp Duty to a mortgage by increasing the amount you borrow to cover it.

However, this will mean you’re paying interest on that extra amount for the duration of your mortgage. You’ll end up paying more overall than if you can pay it outright. Borrowing more may also mean you have a higher Loan to Value ratio with higher interest rates on your mortgage.

Handy to know



You may have to pay a higher tax rate if you get the keys to your new home before selling your current one. If so, you can apply for a refund on the government website once your home has been sold.

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Are you getting ready to take your first step on the property ladder?
We're here to offer guidance along each step of your journey, to make it as simple as possible.

First time buyer help hub