When it comes to buying a property, you have plenty of costs to keep you on your toes. There are legal fees and movers fees to pay on top of estate agency fees. And just when you think there are no more fees you could possibly have to pay, you get hit with Stamp Duty Land Tax.
But what exactly is land tax? When do you have to pay it and how does it affect first-time buyers?
In this blog post we will be answering all these questions and more, making you an expert on all things Stamp Duty Land Tax!
Looking for a quick answer? Check out our interactive menu below!
- What is stamp duty land tax?
- Do you pay stamp duty in England and Northern Ireland?
- Who pays stamp duty?
- Is stamp duty paid on exchange or completion?
- Can you pay stamp duty in installments?
- How much is stamp duty?
- How do I calculate my bill?
- Is there stamp duty relief for first-time buyers?
- Do I need to pay stamp duty tax?
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What is stamp duty land tax?
Stamp Duty Land Tax, or Stamp duty, is a tax that is paid when you are buying a home to HM Revenue & Customs. How much stamp duty you will pay depends upon a range of factors such as how much you are paying for the property, where it is located, and whether it is your only property or not. If your property is worth less than £40,000 then you will not need to pay any stamp duty.
Is land tax the same as stamp duty?
Stamp Duty and Land tax are the same tax under different names. The legal term for stamp duty is stamp duty land tax.
Do you pay stamp duty in England and Northern Ireland?
Stamp Duty Land Tax is a tax that is applicable to properties that are purchased in England and Northern Ireland. Should the property that you wish to purchase be located in Wales or Scotland there are different variations of Stamp Duty Land Tax that you will need to pay. If you are buying a property in Wales you will need to pay Land Transaction Tax and if you are buying property in Scotland you will need to pay Land And Buildings Transaction Tax.
Who pays stamp duty?
It is the duty of the home buyer to pay the stamp duty and not the seller. This is normally paid by your solicitor on your behalf as part of the purchase process.
If you live in England or Northern Ireland, then as of the 23rd September 2022 you will no longer pay stamp duty on the first £250,000 of a properties value. If you are buying your first home then you will pay no stamp duty on the first £425,000 of the value of the property. However, it is worth noting that stamp duty is once again set to change in April 2025 in accordance with the 2022 autumn budget.
If you are buying an additional property, then you will pay 3% at the lowest band. If you are a non-UK resident then you will have to pay an additional 2% surcharge on top of normal rates.
Is stamp duty paid on exchange or completion?
Once you have completed the sale of your property, you will have 14 days to file a return to HMRC and pay any stamp duty that is due on your property. Typically your solicitor or conveyancer will calculate and pay your stamp duty bill on your behalf. They will collect the money for you in advance and submit your return and pay the tax on your completion day.
Can you pay stamp duty in installments?
Unfortunately, you are unable to pay stamp duty in installments. The full amount of stamp duty must be paid to HMRC within 14 days of completion.
How much is stamp duty?
How much stamp duty you will pay depends upon the property price threshold your property falls into. There are different rates depending on if you live in England and Northern Ireland compared to if you live in Scotland and Wales. It will also depend on whether the new property you are purchasing is a second home or not.
Below are the different stamp duty rates for England, Northern Ireland, Scotland and Wales according to data from HomeOwners Alliance:
Stamp duty in England and Northern Ireland
| Purchase price of property | Stamp duty rate | Stamp duty rate for additional properties |
| Up to £250,000 | 0% | 3% |
| £250,001 to £925,000 | 5% | 8% |
| £925,001 to £1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
Stamp duty in Scotland
| Purchase price of property | Stamp duty rate | Stamp duty rate for additional properties |
| Up to £145,000 | 0% | 4% |
| £145,001 to £250,000 | 2% | 6% |
| £250,001 to £325,000 | 5% | 9% |
| £325,000 to £750,000 | 10% | 14% |
| Over £750,000 | 12% | 16% |
First-time buyer relief in Scotland is £175,000.
Stamp duty in Wales
| Purchase price of property | Stamp duty rate | Stamp duty rate for additional properties |
| Up to £180,000 | 0% | 4% |
| £180,001 up to £250,000 | 3.5% | 7.5% |
| £250,001 to £400,000 | 5% | 9% |
| £400,001 to £750,000 | 7.5% | 11.5% |
| £750,001 to £1.5m | 10% | 14% |
| Over £1.5m | 12% | 16% |
There is no first-time buyer relief in Wales.
How do I calculate my bill?
Stamp duty is calculated in a similar way to income tax works.
An example of how stamp duty is collected is if you agree to purchase a home for £550,000 then you will pay:
- 0% on the first £250,000 = £0
- 5% on the next 3300,000 = £15,000
- Total stamp duty = £15,000
Is there stamp duty relief for first-time buyers?
If you are a first-time buyer in England or Northern Ireland, you will not have to pay any stamp duty on a property worth up to £425,000 in England and Northern Ireland. If the property you’re buying is worth between £425,001 – £625,000 then you will pay 5% stamp duty, but only on the value above £425,000.
Do I need to pay stamp duty tax?
There is no concrete answer to whether you need to pay stamp duty as it depends upon your status as a buyer, how many properties you own and the value of the property. As a rule of thumb, if you are not a first-time buyer you might have to pay stamp duty tax.
However, there are several different factors that would make you exempt from stamp duty. Below are some of the reasons why you may not have to pay stamp duty land tax:
- Right-to-buy transactions can qualify you for discounts
- If your property is worth less than £40,000 then you will be exempt from stamp duty
- Zero carbon homes and flats under £500,000 are exempt and ones above have their bill reduced by £15,000
- Charities can get relief from stamp duty when they buy land and property for charitable purposes
- If the property is registered to a company instead of an individual, and costs more than £500,000, they can have a stamp duty rate of 15%
- If you are a registered social landlord buying property or land you may qualify for relief
What was Stamp Duty Holiday?
Stamp duty holiday was a temporary tax break that was introduced by the government from the 8th July 2020 to 30th June 2021, and was granted on residential properties on up to the first £500,000 and a break on the first £250,000 from 1st July to the 30th September 2021. The government introduced these temporary tax breaks as a way of breathing fresh air into the UK housing market in the middle of the coronavirus pandemic. However, these tax breaks did not apply to everyone and if you were buying an additional property you would be subject to a 3% higher rate on stamp duty during this time.
As a result of this tax break, buyers were able to purchase properties for less than £500,000, and later for £250,000, without having to pay any stamp duty. This lead to an upturn in house purchases with 1.45 million purchases agreed in 2021.
This covers everything you need to know about Stamp Duty Land Tax. If you have any questions, queries, or insight into the matter, please feel free to get in touch.
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Alexandra is a junior content producer who enjoys writing articles and finding out more about the property market. Read more about Alexandra here.
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