Stamp Duty explained
Written by Robert Bester, Consumer Finance Expert Robert has been a writer for six years, specialising in consumer finance and the UK lending market. Concentrating on consumer credit products, Robert writes informative articles that help customers manage their personal finances efficiently.
26th July 2021
2 minute read
Moving house can be very expensive, not least from extra costs such as stamp duty and legal fees. You would be forgiven for needing a calculator when adding up your additional expenses when buying a property, as it can get very complicated.
We’ve put together a short 2019 guide on understanding stamp duty and how much you could be paying. We also explore stamp duty relief for first-time buyers and how this works for buying your very first property. Keep reading to find out more on stamp duty and how you should prepare for it when moving house.
What is stamp duty?
- Stamp Duty Land Tax is due on properties worth over £125,000
- How much you pay depends on the overall value of the property
- This will need to be paid prior to you moving in
Stamp Duty Land Tax (or SDLT) will be due for anyone looking to buy a property worth over £125,000 in value in England and Northern Ireland. In Scotland it is called the Land and Buildings Transaction Tax (LBTT) and in Wales it’s referred to as the Land Transaction Tax (LTT).
Even if you’re purchasing a freehold or leasehold property you will still have to pay SDLT. In addition, if you’re buying a second home (not selling your first home) you will have to pay SDLT on any property worth over £40,000.
How much is stamp duty?
The stamp duty that you will have to pay is entirely based on the value of your property. It means that the more expensive your property, the more stamp duty you will expect to pay. The table below will give you an idea of how much you might have to pay:
The total stamp duty you pay is separated into the percentages above and then calculated in separate bands. For example, a property worth £300,000 will have a breakdown of the following:
- 0% on the first £125,000 = £0
- 2% charged against £125,000 (between £125,000 and £250,000) = £2,500
- 5% charged against the remaining £50,000 = £2,500
The total stamp duty paid will therefore be £5,000. Please note: these rates may differ for those getting a leasehold property.
How do I get stamp duty relief?
First-time buyers will automatically get stamp duty relief on properties valued up to £300,000. In addition, if you’re under a shared ownership scheme you can claim relief on properties valued up to £500,000. You must fall under the following conditions to be eligible for stamp duty relief:
- Never owned or been linked to any other property in the UK or abroad
- Must be a first-time buyer in England or Northern Ireland
- If you’re jointly buying a property you both need to be a first-time buyer
- You will avoid stamp duty completely by purchasing a property valued under £125,000
Have a read of our top 5 practical tips for first-time buyers to get more information on buying your first home.
When do I have to pay stamp duty?
Stamp duty is due to be paid within 14 days of you completing the purchase of your new property. You must fill out an SDLT return and send either a paper copy or an online copy to HMRC, or you may face further penalties.
Usually your solicitor will deal with paying the SDLT on your behalf, but there’s nothing stopping you from doing it yourself, as long as you have all the right information. Remember that you may need to fill out different paperwork depending on whether you are paying your SDLT by post or online. Check out this resource on the GOV.UK website for more details.
Start comparing mortgage offers
Now that you know about Stamp Duty, you might want to start searching for the right mortgage. You can keep reading about mortgages over on our mortgage hub, or use our moneymatcher tool to find the best mortgage deal for you.