What is Stamp Duty?

Stamp Duty is a tax that applies when buying a property or land. You’ll pay Stamp Duty on residential properties in England and Northern Ireland costing more than £125,000, unless you’re a first-time buyer. This tax applies to both freehold and leasehold properties, whether you’re buying outright or with a mortgage.

If you’re purchasing a property in Scotland, you’ll pay Land and Buildings Transaction Tax instead, and in Wales, it’s Land Transaction Tax.

How is Stamp Duty calculated?

Stamp Duty is calculated based on the property purchase price, with different rates for different price bands. The tax is applied to the portion of the price that falls within each band.

Stamp Duty Rates:

0% – Up to £125,000

2% – £125,001 to £250,000

5% – £250,001 to £925,000

10% – £925,001 to £1.5 Million

12% – Over £1.5 Million

For example, if you buy a house for £350,000:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the remaining £100,000 = £5,000

Total Stamp Duty to pay = £7,500

Stamp Duty Relief for First-Time Buyers

If you’re a first-time buyer in England or Northern Ireland, you won’t pay Stamp Duty on properties up to £300,000. This is called first-time buyer relief.

For properties costing between £300,001 and £500,000, you’ll pay no Stamp Duty on the first £300,000, and then 5% on the remaining amount.

On the same £350,000 home, a first-time buyer pays:

• 0% on the first £300,000 = £0
• 5% on the remaining £50,000 = £2,500
• Total Stamp Duty to pay = £2,500

That’s £5,000 less than a buyer who has owned a home before.

Buying Above £500,000

If the property costs more than £500,000, first-time buyer relief does not apply at all, and you’ll pay the standard rates on the whole purchase price.

The jump is worth planning around. A first-time buyer paying exactly £500,000 owes £10,000. At £510,000, the same buyer owes £15,500. Ten thousand pounds more on the price adds £5,500 to the tax bill.

Who Counts as a First-Time Buyer?

You are considered a first-time buyer if:

• You’re purchasing your only or main residence.
• You’ve never owned a freehold or leasehold interest in any residential property, whether in the UK or abroad.

If you’ve inherited a property (or part of one), you are not considered a first-time buyer.

Stamp Duty When Buying with Someone Else

If you’re buying a property with someone else, both of you must meet the criteria for first-time buyers to qualify for Stamp Duty relief. If one of you has owned a home before, the relief is lost on the whole purchase.