What is Stamp Duty and How Much Does it Cost?

What is Stamp Duty and How Much Does it Cost?
Home Blog What Is Stamp Duty And How Much Does It Cost?
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: May 21, 2024

What is Stamp Duty and How Much Does it Cost?

Stamp duty is a tax paid on residential homes and land bought in England or Northern Ireland for £250,000 or more. Different rules apply in Scotland and Wales.

There are some exemptions, notably for first-time buyers who pay no stamp duty on properties bought for up to £425,000.

It applies to freehold and leasehold properties bought outright or with a mortgage. Non-UK residents buying property in England or Northern Ireland may have to pay an additional 2% on top of the existing rate due.

Use our calculator below to work out how much stamp duty could be payable on the property you’re looking to buy. Then read on to find out all you need to know about the different thresholds and how this is all calculated.

calculator icon

Stamp Duty Calculator

This calculator can tell you how much Stamp Duty Land Tax you will need to pay on your property purchase, whether you're a first-time buyer, a home-mover or in the market for an investment property.

Enter an amount in pound sterling
£

Your stamp duty to pay is:

Your effective tax rate is

Now that you've worked out how much stamp duty is payable, it's a good idea to talk to a broker about your mortgage options. Their knowledge and expertise can help you make sure you aren't paying over the odds with all costs and fees factored in.

How is stamp duty calculated?

Rates are separated into bands and calculated as a progressive rate system. This means that, rather than paying a flat rate for the whole property, you pay a different percentage on each portion of it according to the price.

This is illustrated below:

Property Value Stamp Duty Rate
Up to £250,000 0%
Next £675,000 (portion from £250,001 - £925,000) 5%
Next £575,000 (portion from £925,001 - £1.5 million) 10%
Any portion above £1.5 million 12%

(Updated May 2024)

So, if you bought a house for £400,000, your stamp duty would be calculated as follows:

First £250,000: 0% (£0)
Portion from £251,000 - £400,000: 5% (£7,450)
Total stamp duty payable: £7,450

NB: These rates are due on main residential homes for those who are not first-time buyers.

Non-standard rates

Rates differ slightly for:

  • First-time buyers
  • Additional homes (including buy to lets)
  • New leasehold properties

First-time buyers

First-time buyers pay no stamp duty on properties bought for up to £425,000. To qualify for this tax relief as a first-time buyer, you must have never owned a home previously in the UK or abroad. You are ineligible even if you inherited property and sold it immediately without ever living in it.

Stamp duty rates for first time buyers are:

Up to £425,000: 0%
Portion from £425,001 - £625,000: 5%

(Updated May 2024)

There is no tax relief if the purchase price is above £625,000. If this is the case the rules and standard rates for anyone who has bought a home before will apply (outlined above).

So, stamp duty for first-time buyers purchasing a home for £600,000 will be:

First £425,000 0% (£0)
Portion from £425,001 - £600,000: 5% (£8,749.95)
Total stamp duty payable: £8,749.95

Additional homes

The rates for additional homes are 3% above the standard rate:

Property Value Stamp Duty Rate
Up to £250,000 3%
Next £675,000 (portion from £250,001 - £925,000) 8%
Next £575,000 (portion from £925,001 - £1.5 million) 13%
Any portion above £1.5 million 15%

(Updated May 2024)

NB: No stamp duty is paid on additional homes bought for under £40,000. If you buy a home for between £40,000 and £250,000, you will pay 3% stamp duty on the entire price of the property, not just the portion above £40,000.

Leasehold homes

Generally, stamp duty for leasehold homes is the same as for any other property.

However, when buying a new-build or a property that has recently been divided into individual leaseholds, you will  pay an extra 1% if the total value of the rent due over the lifetime of the mortgage exceeds £250,000.

Exemptions

Stamp duty is not payable on:

  • Caravans
  • Mobile homes
  • Houseboats
  • Properties transferred by pursuance of a court order
  • Property inherited in a will
  • Property that is gifted

When is it payable?

Stamp duty must be paid within 14 days of completion. Often, your solicitor will do this for you but the legal responsibility to ensure it is paid on time remains with you.

You must submit a return even if no stamp duty is due.

Stamp duty can have a significant impact on affordability and your overall cost of borrowing. Some lenders will allow you to add stamp duty to your mortgage, but you will need to consider this carefully as it will affect your repayments and loan-to-value ratio.

 

Maximise your chances of approval, whatever your situation - Find your perfect mortgage broker

By browsing our site you consent to our use of cookies.