What is stamp duty? How much will it cost you? We’ll explain this fully so you can work out how much you can expect to pay.
What is stamp duty?
Stamp duty land tax is a tax you have to pay in England, Wales or Northern Ireland for a property, or piece of land, over the price of £125,000. It applies to all properties, both freehold and leasehold, whether you’re paying outright for your home or if you’re taking out a mortgage. Use our stamp duty calculator below to give you an idea of what you’ll be paying.
The cost of moving house does add up, but for many, this is an unavoidable one. The amount you’ll pay depends on the property price and its value.
Do first-time buyers pay stamp duty?
During the Autumn Budget 2017 it was announced that first-time buyers would be exempt from paying stamp duty for properties under £300,000. First-time buyers purchasing a property up to £500,000 will only need to pay 5% tax on the portion of the purchase price only.
How much is stamp duty?
Stamp duty varies on an increasing scale and is calculated based on the proportion of the value in each tax bracket. Using a stamp duty calculator can help you work out exactly how much you’ll be paying.
|Stamp duty %||Property value|
|0%||£0 – £125,000|
|2%||£125,001 – £250,000|
|5%||£250,001 – £925,000|
|10%||£925,001 – £1.5 million|
Who has to pay stamp duty?
Only the buyer pays stamp duty, not the seller. Every buyer has to pay stamp duty if their property or land is valued over £300,000.
Stamp duty holiday
The stamp duty holiday was introduced in 2020 to keep the housing market firing after the impact of the pandemic. It certainly did the trick, and an extension was announced in the Spring Budget announcement in March 2021. It applies to properties worth up to £500,000.
The holiday now ends in June with a taper to September, for properties up to £250,000. To take advantage of the stamp duty holiday, ensure you’re prepared and keep momentum going at every step. You can’t afford delays, especially in the current climate.
What does the tax apply to?
You don’t pay stamp duty on any removable fixtures and fittings that come with your house. It’s only calculated on the fixed items such as bathrooms, kitchens or built-in wardrobes.
Fixtures and fittings could be an opportunity to reduce your stamp duty bill. First, decide with the seller (before the exchange) the exact cost of all removable fixtures and fittings included in the costs of the sale. If this is queried by HMRC, you need to be able to justify how you reached the exact figure when calculating what you owe.
When does stamp duty not apply?
There are some reliefs and exemptions which offer clarity on when the tax may and may not apply:
- Buyers may be eligible for stamp duty relief if you are buying your home under the Right to Buy scheme
- You don’t have to pay stamp duty if:
- No money exchanges hands
- You inherit the property (but you may have to pay inheritance tax)
- The property is left to you in a will
- You buy a freehold property for less than £40,000
- Property is transferred because of divorce or dissolution of a civil partnership
How do I pay SDLT?
Your conveyancer or solicitor should manage this as part of the completion process so be sure to raise any specific queries with them.
It’s the buyer’s obligation to submit a stamp duty tax return within 14 days of being eligible to take ownership of a property. Even if you’re exempt from paying, you’re still required to submit a return. Failure to complete a return could result in penalties being applied by HMRC.
Need a professional?
If you’re buying a house and need conveyancing quotes, we can connect you with a solicitor, a trusted member of our experienced panel. They’ll be able to carry out a range of legal work and ensure the road to buying a house runs as smoothly as possible.