A quick guide to stamp duty

by Rizwan Osman on 4th November 2019

If you’re buying a house, you need to factor the cost of stamp duty into your budget. The stamp duty on London property could be substantial. There have also been many changes to the tax over the past years, so it is important to understand how it works. Read on for our quick guide to stamp duty.

A quick guide to stamp duty

What is stamp duty?

Stamp duty land tax (to give it it’s full title – or SDLT) is a one-off tax that must be paid when you buy a property or land that costs more than a set threshold in England and Northern Ireland (currently £125,000 for residential properties and £150,000 for non-residential properties and land).

Different rules apply for first-time buyers purchasing a property costing £500,000 or less. There is also an additional stamp duty levy on for people buying a second property.


How much will I pay?

Following a change in the rules five years ago, the rate at which you pay stamp duty depends upon the purchase price. It is a progressive tax, meaning you pay a higher percentage of stamp duty as the property price rises – but you only pay the higher rate for the portion of the price at that rate.


Property Value SDLT Rates
Up to £125,000 0%
The next £125,000 (the portition from £125,001 to £250,000) 2%
The next £625,000 (the portion from £250,001 to £925,000) 5%
The next £575,000 (the portion from £925,001 t0 £1.5million) 10%
The remaining amount (the portion above £1.5million) 12%


You can work out exactly how much you will need to pay by using a stamp duty calculator – there is one on the government website.


First-time buyers and stamp duty

First-time buyers in England and Northern Ireland, purchasing a property worth up to £500,000, don’t pay stamp duty on the first £300,000 and pay 5% on the portion between £300,000 and £500,000).

In other words, the rates for first-time buyers are


Property Value SDLT Rates
Up to £300,000 0%
The portion from £300,001 to £500,000 5%


In addition, the autumn 2018 budget extended the stamp duty tax exemption to first-time buyers purchasing a shared ownership property valued at up to £500,000.


What is a first-time buyer?

You will not be considered a first-time buyer if you have owned or inherited a property before or if you have been named on the deeds of another property. Nor will you be eligible if you are married and your spouse has owned a property in the past, even if you have never owned a property in your own right.

However, if you are not married but living with a partner who has owned a property and you have not, you will be considered a first-time buyer.

If you are purchasing a buy-to-let property, you won’t be considered a first-time buyer either, even if you haven’t owned property before – although you are allowed to rent out a room in your home.


Higher rates for additional properties

You will usually pay 3% on top of the normal stamp duty rates if buying a residential property means you will own more than one home.

You will not pay the extra 3% if the property you’re buying is replacing your main residence and that has already been sold.

If there’s a delay selling your main home, and it has not been sold on the day you complete on your new property, you will have to pay the higher rate. However, you may be able to get a refund if you sell your previous main home within 36 months.

Find out more about additional property rates on the government website.


How to pay stamp duty

You have 14 days from completion date to file your stamp duty return and pay (previously the time limit was 30 days). If you don’t pay in time you could be fined.

In most cases, the solicitor carrying out your conveyancing will pay the tax on your behalf at completion and add the amount to their fees. They’ll also claim any relief you’re eligible for, such as if you’re a first-time buyer. However, it is your responsibility to ensure that the stamp duty is paid.


If you are looking to buy property in south west London, contact us. We can advise you about stamp duty as well as other aspects of your house purchase and show you our current selection of properties.