Stamp Duty Explained: What You'll Actually Pay When You Buy A Home

Stamp duty is usually the largest single cheque a buyer writes after the deposit, and it is the one people guess at. It is worth not guessing: the difference between £499,000 and £501,000 on an offer can be five thousand pounds of tax.

Here is how it actually works.

What stamp duty is

Stamp Duty Land Tax — SDLT — is a tax on buying property. It falls due on completion, and it is paid as a lump sum. It is not something you can add to the mortgage.

SDLT covers England and Northern Ireland. Scotland has Land and Buildings Transaction Tax instead, and Wales has Land Transaction Tax. Different rates, different thresholds, same idea.

What you pay depends on four things: the price, whether you are a first-time buyer, whether you will own more than one property afterwards, and whether you are UK resident for SDLT purposes.

It is worked out in slices

This is the part that trips people up. You do not pay one rate on the whole price. You pay each rate only on the part of the price that falls inside its band.

For a single home, if you are not a first-time buyer:

• Up to £125,000 — nothing
• £125,001 to £250,000 — 2%
• £250,001 to £925,000 — 5%
• £925,001 to £1.5 million — 10%
• Above £1.5 million — 12%

So on a £350,000 house:

• nothing on the first £125,000
• 2% on the next £125,000 — £2,500
• 5% on the last £100,000 — £5,000

£7,500 in total. Not 5% of £350,000, which would be £17,500.

First-time buyers

If every buyer on the purchase is buying their first home, and you are going to live in it, first-time buyers' relief applies:

• Up to £300,000 — nothing
• £300,001 to £500,000 — 5%

A first-time buyer at £450,000 pays 5% on £150,000: £7,500. Without the relief the same purchase would cost £12,500, so the relief is worth £5,000.

The £500,000 cliff edge

This one deserves its own heading, because it is the most expensive thing in the whole system and almost nobody knows about it.

Above £500,000, first-time buyers' relief does not taper. It vanishes. You go onto the standard rates for the entire purchase.

• At £500,000, a first-time buyer pays £10,000.
• At £500,001, the same buyer pays £15,000.

One pound more on the price costs five thousand pounds in tax. If you are a first-time buyer negotiating near half a million, that number belongs in the conversation.

Buying an additional property

If owning this property means you will own more than one, higher rates apply. They kick in at £40,000 and they add 5 percentage points to every band:

• Up to £125,000 — 5%
• £125,001 to £250,000 — 7%
• £250,001 to £925,000 — 10%
• £925,001 to £1.5 million — 15%
• Above £1.5 million — 17%

That £350,000 house, bought as a second property, comes to £25,000 instead of £7,500.

If you are replacing your main home, you may get it back

First, the good news that gets missed: if you sell your old main home before you complete on the new one, or on the same day, the higher rates do not apply in the first place. There is nothing to pay and nothing to reclaim. That is worth pushing for when the chain is being scheduled — a simultaneous completion saves you the cash-flow, not just the tax.

The higher rates catch people who buy before they sell — a bridging situation, or a chain that broke. If the new property is replacing your main residence and you sell the old one within three years, you can reclaim the surcharge.

The claim has to be made within 12 months of the sale, or 12 months of filing the SDLT return, whichever is later. That window closes quietly. If this applies to you, put a date in the diary the day you complete.

You cannot reclaim if you or your spouse still own any part of the old home.

If you are not UK resident

Non-UK residents pay 2 percentage points on top of whatever rate would otherwise apply. This has been in place since 1 April 2021.

The test is not the one you might expect. For SDLT, you count as non-resident if you were not in the UK for at least 183 days in the 12 months before the purchase. It has nothing to do with your visa or your nationality.

If you become resident afterwards — 183 days in any continuous 365-day period falling between 364 days before and 365 days after the transaction — you can reclaim the extra 2%. That claim runs for two years from the transaction date.

One quirk worth knowing: if a married couple buy together and one of them passes the UK-resident test, both are treated as resident.

Paying it

The return and the payment are due within 14 days of completion. Miss it and there are penalties and interest.

In practice your conveyancer does this as part of the completion work — the money goes to them with the balance, and they file and pay. Ask them to confirm it has been done, and keep the confirmation. Misfiled returns are one of the few things that can come back at you years later.

If the price is under £40,000 and the purchase is freehold, there is no return to file at all — unless the price forms part of linked transactions, in which case it is the total that counts.

Where stamp duty sits in the timeline

You do not pay it on offer, or on exchange. You need it available for completion, which means it has to be in your solicitor's client account before then, alongside the balance of the purchase price.

A typical freehold purchase runs eight to fourteen weeks from offer accepted to completion. Leasehold usually takes a little longer. Which means the stamp duty figure is worth knowing on day one, not on week ten — it changes what you can afford to offer.

Before you rely on a figure

SDLT rates and thresholds are set at fiscal events and can move with little notice. The rates set out above have applied since 1 April 2025. Check the GOV.UK rates page, or ask us, before you commit to a number in an offer or a mortgage application — the tax is worked out on the rules in force on the day you complete, not the day you offer.

Separately, a High Value Council Tax Surcharge is due from April 2028 for owners of properties valued at £2 million or more. If you have seen the headlines about it: that is a tax on owning, charged every year, not a tax on buying. It does not affect what you pay at completion.

Sources

• Residential rates and bands
• First-time buyers' relief
• Additional properties
• Non-UK residents
• Deadlines and exemptions
• High Value Council Tax Surcharge
• Budget 2025, where the surcharge amounts are published

This is general information about SDLT in England and Northern Ireland, not advice on your purchase. Your own position depends on facts we would need to see.