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What is stamp duty and what are the thresholds?
Discover how stamp duty is calculated, when to pay and the latest changes
Buying a property usually means coming face-to-face with stamp duty, one of Britain’s most hated taxes.
What you pay depends on the price of the property you’re buying and what kind of property buyer you are. Tax rates and thresholds also vary depending on where you are in the UK.
In this article, Telegraph Money sets out everything you need to know about stamp duty, including:
What is stamp duty?
Stamp duty is a tax payable on property purchases in England and Northern Ireland, formally called Stamp Duty And Land Tax.
In Scotland, property sales are subject to Land and Buildings Transaction Tax and in Wales, Land Transaction Tax.
It is, even by tax standards, markedly unpopular.
The levy is paid in banded thresholds based on a property’s value. You have to pay stamp duty regardless of whether your property is freehold or leasehold, or if you are buying through a shared ownership scheme.
You’ll pay a surcharge if you already own another residential property – this was recently increased to 5pc (up from 3pc) in Labour’s October 2024 Budget.
How is stamp duty calculated?
Stamp duty is calculated on a tiered system, meaning different parts of the property’s purchase price are taxed at different rates. In addition, these rates differ depending on whether you are a:
In a similar way to income tax, stamp duty rates are applied to the portions of the property value that sit within each band.
As of April 1 2025, this is how the thresholds work, as stated on the government website.
First-time buyers:
- Up to £300,000: 0pc
- £300,001-£500,000: 5pc
First-time buyer relief is lost for properties with a value of more than £500,000.
Home movers:
- Up to £125,000: 0pc
- £125,001-£250,000: 2pc
- £250,001-£925,000: 5pc
- £925,001-£1.5m: 10pc
- More than £1.5m: 12pc
On October 31 2024, a higher levy of 5pc was introduced for those buying a property that’s in addition to the property they live in – this includes second home owners and buy-to-let investors.
Second homes:
- Up to £125,000: 5pc
- £125,001-£250,000: 7pc
- £250,001-£925,000: 10pc
- £925,001-£1.5m: 15pc
- More than £1.5m: 17pc.
No stamp duty is owed on properties with a value of less than £40,000.
If you buy a new home to move into before you’ve sold your existing home (due to delays further down the property chain, for example), you’ll pay the second-home surcharge – but you can apply for a refund if you sell your previous main home within 36 months.
Examples
Below, we’ve used some examples to show how these apply.
First-time buyer on a property purchase of £525,000
First-time buyer relief is now lost on property purchases of over £500,000 so standard home mover rates apply.
- 0-£125,000: £0
- £125,000-£250,000: 2pc on £125,000 totalling £2,500
- £250,000-£525,000: 5pc on £275,000 totalling £13,750
Total stamp duty owed: £16,250
Home-mover on a property purchase of £1,250,000
- 0-£125,000: £0
- £125,000-£250,000: 2pc on £125,000 totalling £2,500
- £250,000-£925,000: 5pc on £675,000 totalling £33,750
- £925,000-£1,250,000: 10pc × £325,000 totalling £32,500
Total stamp duty owed: £68,750
Second home purchase on a property purchase of £1,250,000
- 0-£125,000: 5pc × £125,000 totalling £6,250
- £125,000-£250,000: 7pc × £125,000 totalling £8,750
- £250,000-£925,000: 10pc × £675,000 totalling £67,500
- £925,000-£1,250,000: 15pc × £325,000 totalling £48,750
Total stamp duty owed: £131,250
Who is eligible for exemptions?
Stamp duty is paid by nearly all residential property buyers purchasing homes worth more than £125,000. These rates are different for first-time buyers, who pay stamp duty on homes worth more than £300,000.
However, there are exceptions. You won’t pay stamp duty if:
- You inherit a property in a will – even if you’re taking on an outstanding mortgage. However, you may need to pay inheritance tax, and inheriting a property (or even a portion of a property) will mean you lose your first-time buyer status if you buy a property at a later date.
- Property ownership is transferred due separation or divorce.
- You buy a freehold property for less than £40,000
You can find more information about exemptions on the government website.
Stamp Duty Land Tax relief
As stated by HMRC, certain transactions qualify for Stamp Duty Land Tax relief reducing the amount of tax you have to pay, including:
- First-time buyers
- Employers buying an employee’s home
- Transfer of property between companies
- Right to Buy properties
Prior to June 2024, multiple dwellings relief (MDR) could be claimed when purchasing multiple residential properties in a single transaction. However, this relief has now been abolished, apart from transactions where:
- Contracts were exchanged on or before 6 March 2024
- Contracts were substantially performed before 1 June 2024
- Contracts complete before 1 June 2024.
Stamp duty FAQs
When do you have to pay stamp duty?
Stamp duty has to be paid within 14 days of completing a house purchase, and it will often be handled by your solicitor or conveyancer – but you can do it yourself.
If you fail to submit the return and pay within the time frame, you may face penalties from HMRC; the tax authority will charge £100 for returns that are up to three months late, and £200 if the return is later. This is in addition to a tax-based penalty, which varies depending on how much tax is owed and how late the payment is.
This means you need to make sure your budget includes the amount you will owe when working out your total costs for the purchase and move.
You can include stamp duty costs as part of your mortgage borrowing and pay for it that way, but it will incur additional interest.
How do you pay stamp duty?
Your solicitor should be able to either help you arrange the stamp duty payment, or just make the transaction on your behalf.
If you have a lawyer or conveyancer acting for you, they can submit the stamp duty return online, but if you are managing it yourself it needs to be done via a paper form. You can order the form you need – SDLT1 – online or by calling HMRC.
The Government advises against sending any other correspondence with the form as it may delay the processing.
It is also important to send the form off in good time to allow for postal delays. HMRC recommends allowing three days for the form to reach the department.
How does stamp duty work for first-time buyers?
If you are buying your first home, the nil-rate extends up to £300,000, giving younger buyers a chance of getting on to the property ladder without a significant tax charge.
From £300,001 to £500,000, first-time buyers pay 5pc of the value of their home over £300,001. First-time buyers purchasing properties over £500,000 won’t receive the relief, and will pay the same stamp duty rates as home movers.
For properties under £500,000, this breaks down as below:
- £0-£300,000 – 0pc
- £300,001-£500,000 – 5pc.
How does stamp duty work for shared ownership properties?
Anyone buying a shared ownership property can choose to either pay stamp duty in one go, based on the property’s market value, or pay the tax in stages.
If you opt to pay the full stamp duty cost, you pay for the full value of the property despite only buying a portion of it – the remaining portion is usually rented out by a housing association. However, if you decide to buy a larger share of the property later on (known as “staircasing”), then you won’t have any more stamp duty to pay.
If you only pay proportional stamp duty, you’ll then have to pay more each time you want to staircase and increase your share. Some shared ownership homeowners have found the added stamp duty costs have prohibited them from increasing how much they own.
How does stamp duty work for home movers?
If you are simply moving from one home to another, and don’t own two properties at the same time at any point, stamp duty costs will work as below:
- £0-£125,000 – 0pc
- £125,001-£925,000 – 5pc
- £925,001-£1.5m – 10pc
- More than £1.5m – 12pc
This is also what you’ll pay as a first-time buyer purchasing a property with a value of more than £500,000.
How does stamp duty work on buy-to-let and second homes?
Buying a second home or buy-to-let property will mean handing over more cash to the taxman as you pay an additional 5pc in stamp duty, on top of the existing bands. This was increased from 3pc on October 31, as part of Labour’s Budget measures.
- £0-£125,000 – 5pc
- £125,001-£925,000 – 10pc
- £925,001-£1.5m – 15pc
- More than £1.5m – 17pc.
The additional levy does not apply if the home you are buying is your primary residence and your old home has already been sold at the time of purchase.
Furthermore, even if you still own your old home when you buy the new one, selling it within 36 months entitles you to a stamp duty refund. This deadline may be extended if extenuating circumstances mean you could not claim the refund within this timeframe.
How does non-residential property stamp duty work
Any non-residential or mixed use property bought for over £150,000 is subject to stamp duty. Non-residential property typically means commercial property, or property that isn’t suitable to live in. A mixed property is one that has both residential and non-residential elements, such as a flat with a shop underneath.
For tax purposes, the category also includes six or more residential properties bought in a single transaction.
You also pay stamp duty on agricultural land, even if it comes as part of a residential property, for example a cottage with fields.
You may pay a higher rate of duty for multiple purchases, or transfers from the same seller.
The tax is also calculated differently from residential stamp duty. Two amounts are calculated separately and then added together; the purchase price of the lease and the value of the annual rent you pay.
How does stamp duty work for non-UK residents?
Since 2021, non-UK residents have had to pay a higher rate of stamp duty when purchasing property in England and Northern Ireland.
The additional levy is two percentage points above the rate for UK residents on the given tax band. For example, where a UK resident will pay 5pc tax on a property bought for £125,001-£925,000, a non-UK resident will pay 7pc.
Overseas buyers also face an additional 2pc surcharge on top of the existing 5pc tax on second homes and buy-to-let properties.