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What is Stamp Duty

What is Stamp duty? We all know it’s not easy to save up and purchase a property. It takes time, effort, and money.

The more you earn, the easier this process can be but even so, it is still tough for many people to buy a property.

Stamp duty is the tax you’ll pay for your property purchase. How much and if you need to pay will depend on the overall property price. Stamp duty land tax can be a financial obstacle in your way when buying a property.

What is Stamp Duty?

In this article, we will cover everything you need to know about stamp duty land tax in England and Northern Ireland and Scotland. 

What is stamp duty land tax
So how much does it all cost?
When do I pay stamp duty?
How much is stamp duty in the UK?
Stamp Duty on a second home.
Stamp duty on New Builds
Stamp Duty on Shared ownerships
Buying commercial property
Stamp duty exemptions
How much is stamp duty normally
Stamp duty holiday in Eng, NI & Wales extended until 30 June – how it works
Buying a home before the stamp duty holiday ends
Stamp duty rates in England and Northern Ireland
When must I pay stamp duty and how can I do it?
Can I add Stamp Duty to my Mortgage?

What is Stamp Duty / SD is a tax that can be charged when your purchasing a property. You will be required to pay stamp duty land tax if you are a first-time buyer purchasing a residential property for your main residence.

If you are purchasing an additional property, or if you are buying a non-residential property.

You might even have to pay if you buy land to build a house on.

How much stamp duty you will need to pay on your property or land will depend on the overall purchase price and where you live.

You can use an online stamp duty calculator to help you work out how much you will need to pay.


Interestingly Stamp Duty was first introduced in 1694 during the reign of King William.

Originally, the tax was meant to be temporary but was designed to raise money for the war with France. When the government wants to raise money, it does so by taxing its citizens. This happens today too.

The highest rate of stamp duty in England was 1%, which was applied until 1997. The highest land and buildings transaction tax is now 12% for properties valued at more than £1.5 million for a UK resident.

The tax has been popular with the government because it helps to raise money. In the last few years, they have collected as much as $8 billion each year through this tax.

The stamp duty rate is going to depend on the price of your home. For properties worth less than £125,000, you won’t have to pay any tax at all as these properties fall below the stamp duty threshold.

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Usually, the person who sells you your home will take care of the Stamp Duty and any other payment for you. You can do it, though.

You must still submit a return, even if you do not owe any stamp duty.

Houses worth less than £125,000 will be subject to nothing. Those with a value of more than £125,000 will see a percentage-based rate applied that varies depending on how much the house has sold for.

The amount of stamp duty you will be charged is based on the value of your property.

A property buyer will pay stamp duty as a lump sum to purchase a new home, second homes, freehold, or leasehold properties. It does not matter if you buy the home with a mortgage or with cash.

To avoid paying additional interest and penalties, you must pay the stamp duty before a given deadline. If it is not done on time, there are possible sanctions imposed.

England and Northern Ireland: Homebuyers will not have to pay stamp duty on the first £500,000 until July 2021.

The rates for England and Northern Ireland up to June 2021 are shown in the table.

If you are buying a buy-to-let property or second home, you will be charged 3% more of the value for each band.

0% £500,001-£925,000
5% £925,001-£1.5m
10% £1.5m+ 12%

England and Northern Ireland

Until 30 September 2021, Homeowners won’t need to pay stamp duty on the first £250,000.

£0-£250,000 (£0-£300,000 for first-time buyers)
0% £250,001-£925,000 (£300,001-£925,000 for first-time buyers)
5% £925,001-£1.5m 10% £1.5m+ 12%

England and Northern Ireland

The stamp duty holiday will end on 31 October, when normal rates will apply.

Stamp Duty in Wales

Buyers won’t need to pay Land Transaction Tax on homes up to £250,000 until 30 June 2020.

The changes do not apply to buying a house to rent it out or a second home. They will need to pay normal rates.

£0-£250,000 0% £250,001-£400,000
5% £400,001-£750,000
7.5% £750,001-£1.5m
10% £1.5m 12%

When you buy a house or land in England and Northern Ireland, there is an English tax called Stamp Duty Land Tax. If you buy a house to live there, you will pay Stamp Duty at standard rates.

If you buy a second home or a buy-to-let property, it will cost you the standard rates from Stamp Duty plus 3% for each band on top. Second homes and buy-to-let properties share the same tax rates because they both qualify as second residences.

Until June 30th, if you buy a house worth £500,000 or less, you will not have to pay any Standard Stamp Duty. You will still have to pay the surcharge on your second house.

As long as the property for which you are now paying stamp duty is not your first UK property, then you will also have to pay an additional 3% surcharge.

It doesn’t matter whether you are buying a leasehold property, shared ownership home, or the freehold of your previous property – you will have to pay Stamp Duty on your new one. What’s more, it’s irrelevant whether you bought your previous property or inherited it – you technically own property and will be liable to a surcharge.

Many builders offer extra services and goods with the property to help you settle in once you own it. Purchasing extras from the developer, such as a fitted kitchen, fitted furniture, or an extension, can incur additional costs.

Stamp duty is payable on fixtures and fittings, such as fitted wardrobes and kitchens. However, note that stamp duty cannot be applied to items like carpets or curtains.

Extras that are not included in the contract price but have a financial value will be reported to your solicitor for tax purposes. As these extras increase the total property cost, they will also attract an increase in stamp duty.

To buy a Shared Ownership home, you will need to put down a deposit. This is the amount you pay toward the share of your purchase at the time of your purchase. The deposit required will vary from property to property, but the typical share you are purchasing is 5% or 10%.

For example, if you buy a 25% share in a home worth £300,000 (full value), the value of your share would be £75,000. Assuming a 5% deposit, you would need to put down an initial deposit of £3,750 before purchasing the property and paying stamp duty on it accordingly.

When calculating stamp duty on land and non-residential property is different, this includes mixed-use land and property.

Land tax is payable on property transactions of £150,000.



You may be eligible for tax relief if you are buying your property before the end of the stamp duty holiday, reside overseas, or have an inheritance.

A first-time buyer can claim a stamp duty holiday if they purchase their home before the 30th November 2021. The property must be worth less than £500,000 to qualify for this exemption. It cannot have been owned by them or anyone in the same family (parents, grandparents, etc.) at any point during its existence as residential accommodation.

For example, SDLT does not apply if you have inherited property. You are entitled to relief if the property has been transferred from your ex-partner following a divorce, separation, or the end of a civil partnership.

You can visit the goverment website for the full list of Stamp Duty exemptions.

There are two basic tax categories for property transactions.

Stamp duty rates range from 2% to 12%, depending on the value of the property in question.

The stamp duty rate only applies when it is time to complete a transaction and if you have enough money after paying your taxes, then you will be able to conduct a legal purchase. 

Chancellor Sunak has announced stamp duty relief up until the end of June 2021. This new ruling creates a two-year window for homebuyers as the UK moves to its next property tax system.

The stamp duty holiday, which came into effect on July 8, 2020, will end on September 30.

What is the stamp duty after September 2021?

On October 1, 2021, the national rate of residential stamp duty is set to return to previous England and Northern Ireland levels.

If you buy a new home worth £500,000 or less before June 30th, 2021, the government will waive £15,000 in stamp duty.

You could use this money to increase your deposit or buy more furniture for the property. When looking for a mortgage, larger deposits are likely to get you better interest rates and lower monthly repayments.

The rate of stamp duty for properties worth more than £500,001 is 5%.

If you’re buying a second home, the tax rate is 3% on the first £500,000 of the purchase price before 8%, then 13% and 15%.

The stamp duty holiday is over in Scotland. In Wales, there’s a stamp duty tax break on homes up to £250,000.

To avoid owing additional money, remember to file a return of your property within 14 days after completing the purchase.

The simple answer is it’s financially better if you can afford not to. Many people do add the stamp duty to their mortgage.

Dropping the cost of stamp duty in your mortgage means you’ll have to pay a bigger mortgage in the long run. You will need a mortgage of £180,000 to buy a house costing £300,000.

You’ll also have to pay stamp duty, which in this example would be £25,538 (£180K x 3%). (in England, Wales or Northern Ireland), you can put the money you saved on your deposit to pay the stamp duty.

Buying a home is an investment that comes with two key considerations: the amount you pay upfront and borrowing costs.

In many cases, a mortgage length for 25 years at a fixed rate of 5% will yield about £8,500 worth of interest in those same time frames.

Secondly, stamp duty can affect your LTV. The most competitive loans require a maximum LTV of 60% but adding the stamp duty will increase to almost 62%. Contact a mortgage broker before making any decisions.

We always recommend talking to a professional who knows what they are doing. They will be able to answer your questions and help you make an informed decision.

You do not want to get anything wrong, and even if you think you are right, it is always best to check.

In Conclusion

We hope you have enjoyed our guide. No one is sure what will happen with stamp duty and whether it will be extended. We just don’t know at the minute, but the government will be considering it.

If you’re buying a home before the stamp duty holiday deadline, remember that there will be other expenses along with stamp duty you will need to pay in addition to your deposit? If this post has been helpful, then please follow us for more!