Stamp Duty

Stamp Duty: The basics

If you’re buying a home, it’s useful to understand what stamp duty is. After placing your deposit and accepting a mortgage offer, it may well be the next largest cost you encounter. However, there’s every chance you won’t need to pay any stamp duty at all.

What is stamp duty?

Stamp duty – or Stamp Duty Land Tax (SDLT) to give it its full name – is a fee charged by the treasury that’s paid on property purchases. It applies to residential properties involved in sales over £125,000, and all non-residential properties or land in sales over £150,000.

In any property sale where it’s required, stamp duty must be paid by the buyer rather than the seller and is liable from the point that the transfer of ownership is completed. You’ll need to file your stamp duty return with HMRC and pay the amount within 14 days of this. If you have hired a conveyancer, they may be able to file the stamp duty for you and include it in their bill.

However, purchasing a property for more than £125,000 doesn’t necessarily mean you’ll pay stamp duty. Conversely, you might have to pay an even higher rate than most homebuyers – it all depends on your own circumstances.

Who pays stamp duty?

  • Anyone purchasing a property valued at more than £125,000 – unless they’re a first time buyer.
  • First time buyers purchasing a property valued at more than £300,000.
  • Anyone buying a second home of any value. However, if you sell your previous residence within three years, some or all of this can be claimed back.
  • Anyone receiving equity, in a transfer of equity that exceeds the £125,000 threshold, including the value any mortgage debts that are transferred.
  • Homeowners who remortgage and use the released funds to pay out of the existing loan, exceeding the threshold.


Who doesn’t pay stamp duty?

  • Anyone purchasing a property for less than £125,000.
  • First time buyers purchasing a property for less than £300,000.
  • Anyone in a situation where equity or property is transferred by the court, through divorce proceedings.
  • Those who acquire property through a will.


There are also situations where, though not listed as exempt, stamp duty relief may be granted. These include things like the property being used for charitable purposes, right to buy and compulsory purchases, shared ownership arrangements, and discounts for multiple dwellings. If you think this may apply to you, it’s best to seek professional advice and discuss your circumstances.

Stamp duty in the UK: how does it differ?

If you’re buying a home in England or Northern Ireland with a value of more than £125,000, you’ll have to pay Stamp Duty Land Tax (SDLT). In Scotland, the equivalent is called Land and Buildings Transaction Tax, while in Wales this is known as the Land Transaction Tax. They work much the same, however the bandings and rates are set differently.

Use this guide to help you figure out how Stamp Duty works throughout the UK for first-time buyers, as well as rates for second homes.

How much is stamp duty in the UK?

Setting aside any discounts or relief your circumstances make you eligible for, how much stamp duty you need to pay is based solely on your property’s purchase price. It’s calculated in much the same way as income tax, with a series of bands, between which a percentage of the value falling inside that band will be owed.

If you already have a home, and/or are purchasing a buy to let property, you’ll need to pay a 3% premium in any given band. Meanwhile, discounts apply for first time buyers – more on that below.

These rates are: 

Stamp duty in England and Northern Ireland

Property price Standard stamp duty rate (excluding first time buyers) Stamp duty rate for second and buy to let homes
£0 to £125,000 0% 3%
£125,000 to £250,000 2% 5%
£250,000 to £925,000 5% 8%
£925,000 to £1.5 million 10% 13%
Over £1.5 million 12% 15%


Stamp duty in Wales (Land Transaction Tax)

Property price Standard stamp duty rate (excluding first time buyers) Stamp duty rate for second and buy to let homes
£0 to £180,000 0% 3%
£180,000 to £250,000 3.5% 6.5%
£250,000 to £400,000 5% 8%
£400,000 to £750,000 7.5% 10.5%
£750,000 to £1.5 million 10% 13%
Over £1.5 million 12% 15%


Stamp duty in Scotland (Land and Buildings Transaction Tax)

Property price Standard stamp duty rate (excluding first time buyers) Stamp duty rate for second and buy to let homes
£0 to £145,000 0% 3%
£145,000 to £250,000 2% 5%
£250,000 to £325,000 5% 8%
£325,000 to £750,000 10% 13%
Over £750,000 12% 15%


How does stamp duty work for me?

Stamp duty for first time buyers:

Stamp duty applies differently to first time buyers. These changes were introduced by the government a few years ago in a bid to help more people get onto the property ladder and offer first time buyers a higher threshold before they’ll be liable for any stamp duty.

To count as a first time buyer, everyone buying the property must never have owned their own home in the UK or abroad, including homes that have been inherited, and you must intend to live at the address. Also, the preferable banding and rates only apply in England, Scotland, and Northern Ireland – with Wales not being included.

As a buyer, you won’t pay any stamp duty up to the first £300,000 of the property’s value, provided the total value doesn’t exceed £500,000. A 5% charge will apply on anything above the £300,000 mark, while if the sale price does exceed £500,000, you won’t be able to claim the relief and standard rates will apply to the whole amount.

If you’re considering buying your own place for the first time and would like to find out more, take a look at our guide to the house buying process, and how to make an offer on a house.

Stamp duty for second homes:

If you’re buying a home and you already own one or more properties within the UK or abroad, you’ll pay an extra 3% rate on top of each band of stamp duty. This applies to the 0% band, so the full value of your property purchase will be liable, with no exemption even if it costs less than £125,000.

However, if you’re buying a new home and selling your existing home at the same time, your new home won’t count as a second home – so the normal rates will apply. What’s more, if you’re buying your second home with the intention of living in it, but plan on selling your existing home at a later date, you could be able to claim back any extra you paid.

So long as you sell your old home within 36 months and then make the ‘second’ home your ‘main’ home, you can apply to have the surcharge you paid refunded to you. The one caveat is that you’ll need to do this within 12 months of selling the old house.

If your second home is intended as a holiday home or a buy-to-let, meaning you keep your other property for more than three years, you won’t be able to claim anything back.  

Whether you’re stepping onto the property ladder for the first time, plan on upsizing for the family, or want to get your hands on a holiday home you always wanted; a Post Office mortgage could make your plans a reality.

To get an estimate of how much we could lend to you, based upon your circumstances, take a look at our mortgage calculator.

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