Conveyancing

A quick guide to stamp duty

By
Zoopla

When it comes to home buying costs, it’s usually stamp duty that hurts the most. Find out how the tax works – and how much it might cost – with our quick guide.

What is stamp duty?

Stamp duty is a tax payable when you buy a freehold or leasehold property (or a share of one) costing more than £125,000. The tax applies whether you’re paying for the home outright or with a mortgage.

Since April 2016, all additional homes, such as buy-to-lets and holiday homes, can be subject to an extra stamp duty charge amounting to 3% of the property purchase price. The add-on tax kicks in on properties costing more than £40,000. 

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You can find out more about additional stamp duty at our popular Q&A on Zoopla. This guide, however, is about stamp duty on residential properties that are intended to be your main home.

Where does stamp duty apply?

Stamp duty applies to the purchase of property in England, Wales and Northern Ireland. If you’re purchasing land or a property in Scotland, you’ll pay Land and Buildings Transaction Tax, which works slightly differently.

How is stamp duty charged?

In December 2014, the way stamp duty was charged moved from a 'slab' system (where you pay a single rate based on the entire property price), to a ‘tiered’ system (where the next rate up applies only to the slice of property value above the relevant threshold).

The reforms have left the vast majority of buyers better off. 

For example, if you bought a property for £300,000 before December 2014, stamp duty would have cost £9,000 – 3% of the whole purchase price. Under the new system, the bill would only come to £5,000.

How do I calculate my stamp duty?

How much stamp duty you pay depends on the purchase price; the more expensive the home, the more you will pay.

The current starting threshold is £125,001 (below that, you pay nothing).

The rate of stamp duty then increases incrementally, starting at 2% and rising to 12% for homes costing £1,500,001 or more.

See below for the rate of stamp duty charged for each property purchase price band.

Property price

 stamp duty

£0 - £125,000

 0%

£125,001 - £250,000

 2%

£250,001 - £925,000

 5%

£925,001 - £1,500,000

 10%

£1,500,001 and over

 12%

When does stamp duty have to be paid?

On completion day – when you take possession of the keys and can move into the property – you pay the stamp duty to your solicitor, who will then transfer it to HMRC within 30 days. There is a fine for late payment.

Are there any exemptions from stamp duty?

In some circumstances no stamp duty is payable, even where the purchase price exceeds £125,000. For example, where the property was left to you in a will, or was transferred to you through divorce or dissolution of a civil partnership.

Compare conveyancing services

A good conveyancer is vital for keeping your property purchase on track. We've partnered with The Move Assistant so you can compare a range of solicitors and licensed conveyancers based on price, service and location.

Compare services

To find out how much stamp duty you’ll owe – if any – speak to your solicitor.

Want to know exactly whay a conveyancer does? Find out with our step-by-step guide.

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