Stamp Duty Land Tax, usually just called stamp duty, is a tax you pay when you buy a property or land in England or Northern Ireland above a certain price. Scotland and Wales have their own versions with different rates. For many buyers it is the largest single cost after the deposit, so it is worth understanding before you set your budget.
How stamp duty is calculated
Stamp duty works in bands, a little like income tax. You do not pay one rate on the whole price; you pay a different rate on each slice of it. Under the standard rates that apply from April 2025, there is no tax on the first £125,000, 2% on the portion from £125,001 to £250,000, 5% on the portion from £250,001 to £925,000, and higher rates above that.
So on a £300,000 home bought by someone who already owns a property, you would pay nothing on the first £125,000, £2,500 on the next £125,000 and £2,500 on the final £50,000: a total of £5,000.
First-time buyer relief
If you, and everyone you are buying with, have never owned a home anywhere in the world, you may qualify for first-time buyer relief. From April 2025, first-time buyers pay no stamp duty on the first £300,000 and 5% on the portion between £300,001 and £500,000.
The relief only applies if the purchase price is £500,000 or less. If you buy a home for £500,001, you lose the relief entirely and pay the standard rates on the whole amount. That cliff edge is worth knowing about if you are negotiating near the limit.
Using the same £300,000 example, a first-time buyer would pay nothing. On a £400,000 home, they would pay 5% on £100,000, which is £5,000, compared with £10,000 at the standard rates.
Second homes and buy-to-let
If you will own more than one residential property at the end of the purchase, a surcharge usually applies on top of the standard rates. This catches people buying a buy-to-let flat or a holiday home, and sometimes people who have not yet sold their previous home. In some circumstances you can reclaim the surcharge if you sell your previous main home within a set period.
Buyers who are not resident in the UK may also pay an additional surcharge. If either of these could apply to you, take advice from your conveyancer early.
When and how you pay
Stamp duty is due within 14 days of completion. In practice your conveyancer will file the return and pay the tax on your behalf, using money you transfer to them before completion. It is not usually something you can add to your mortgage, so it needs to come from savings along with your deposit and fees.
Check your own figure
Rates and thresholds change, sometimes at short notice in a Budget. The figures in this article reflect the rules in England from April 2025. Before you make an offer, use the official stamp duty calculator on GOV.UK and confirm the figure with your conveyancer, who will also check whether any reliefs or surcharges apply to your situation.
When you are budgeting, remember the other costs of buying too: conveyancing fees, searches, a survey, mortgage arrangement fees and removals. Together these can easily add a few thousand pounds on top of stamp duty.
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