By Nic Hopkirk

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What is stamp duty, how much is it in the UK and when do you have to pay it? Get the lowdown with our stamp duty guide.

What is stamp duty?

When you buy property or land in England and Northern Ireland, you usually pay tax on it. And that's called stamp duty.

You pay the tax when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, for example, if you take on a mortgage for it or buy a share in a house

The amount you pay changes depending on the price of the property. Let's look at how it's calculated.

How much is stamp duty in the UK?

Stamp duty works out as a percentage of the property you’re buying. The more expensive the property, the higher the percentage you’ll pay.

Property priceStamp duty percentage to pay
£0 - £125,000 0%
£125,000 - £250,0002%
£250,000 - £925,0005%
£925,000 - £1.5m10%
£1.5m+ 12%

But there's good news for buyers: you only pay the percentage price on the part of the property that sits within each band.

So, if you bought a property costing £250,000, you would pay:

  • 0% on the first £125,000
  • 2% on the remaining £125,000 = £2,500

And your bill would be £2,500

If you bought a property costing £500,000, you would pay:

  • 0% on the first £125,000
  • 2% on the on portion between £125,000 and £250,000 = £2,500
  • 5% on the portion between £250,000 and £500,000 = £12,500

So your bill would be £15,000.

When do you have to pay stamp duty?

Stamp duty must be paid within 14 days of the date you complete on your property purchase. That’s when its ownership legally transfers to you. 

Usually this part of the process is handled by your solicitor or conveyancer. They’ll send the Land Transaction Return to HM Revenue & Customs on the day of completion and transfer the money on your behalf.

Here’s more information on how to file stamp duty land tax returns to HMRC

Can you avoid paying stamp duty?

Yes, if you’re a first-time buyer. 

First time buyers don’t have to pay stamp duty on the first £300,000 of home purchases, as long as the total price doesn’t exceed £500,000.

If your home costs between £300,000 and £500,000, you’ll pay stamp duty at the 5% rate only on the slice of the purchase price above £300,000.

Property pricePercentage of stamp duty paid
£0 - £300,000 0%
£300,000 - £500,000 5%
£500,000+Normal stamp duty rates apply

However, it's sad news for first-time buyers who are purchasing a home that costs more than £500,000. If that happens, they’ll pay the normal stamp duty rates like everybody else.

You can also avoid paying stamp duty if:

  • A property is transferred to you as part of a divorce settlement
  • A property is transferred to you through a will
  • A property is transferred to you as a gift*

*But there’s a caveat with this last one: the property must be mortgage-free for you to avoid paying the stamp duty.

If you take over some or all of an existing mortgage, then the stamp duty may be payable on the value of the mortgage that's over the relevant stamp duty threshold.

What stamp duty do you pay on second homes?

If you’re buying a second home or a buy-to-let property, you’ll have to pay a stamp duty surcharge of 3% on the entire value of the property, on top of any standard stamp duty that's due.

So, if you buy an investment property worth £250,000, you will need to pay £10,000 in stamp duty:

  • 0 - £124,999 at 0% = £0 stamp duty
  • £125,000 - £250,000 at 2% = £2,500 stamp duty
  • Second home surcharge at 3% of the property's total value = £7,500 stamp duty

You’ll also incur the 3% surcharge if you purchase another property as your main home before you've completed on the sale of your existing one. 

However, you can claim the money back if you then complete the sale within 36 months.

Our guide gives the lowdown on the 3% stamp duty surcharge.

Do overseas buyers pay stamp duty?

Yes. Non-UK residents pay normal stamp duty, plus an extra 2% surcharge when buying property in England and Northern Ireland.

Does stamp duty apply to homes bought in Scotland and Wales?

Yes, but both Scotland and Wales have their own versions of stamp duty.

In Scotland, the tax is called the Land and Buildings Transaction Tax. 

Land and Buildings Transaction Tax rates in Scotland

Property priceLand and Buildings Transaction Tax rates
£0 - £145,000 0%
£145,000 to £250,0002%
£250,000 to £325,0005%
£325,000 to £750,00010%
Over £750,00012%

In Wales, it’s called a Land Transaction Tax.

Land Transaction Tax rates in Wales

Property priceLand Transaction Tax rates
£0 - £180,0000%
£180,000 - £250,0003.5%
£250,000 - £400,0005%
£400,000 - £750,0007.5%
£750,000 - £1,500,00010%

What happens if you can't pay stamp duty?

You’ll pay an automatic fixed penalty if you don’t file your return by the filing date, that's within 14 days of completing on your property purchase.

The amount of the penalty depends on how late you file your return.

You’ll pay a fixed penalty of:

  • £100 up to three months after the filing date
  • £200 after three months of the filing date
  • And for more than 12 months after the filing date, you'll pay a fixed penalty plus a tax-based penalty, which can be anything up to the full amount of the tax due. You also have to pay interest on the tax that’s due - as well as the outstanding tax itself. Ouch.

Can you appeal against a stamp duty late filing penalty?

Yes. If you could not file your return by the deadline because of an unusual event that was either unforeseeable or beyond your control, you can appeal.

Find out more about stamp duty land tax and the appeals process at the government’s website.