Stamp Duty Land Tax (SDLT), also known as stamp duty, is a tax you pay when buying property or land in England or Northern Ireland. As one of the biggest upfront home-buying costs, it’s worth getting your head around how stamp duty works so you can build it into your budget spreadsheet. Here’s our rundown of everything you need to know about this key home-buying tax.


How does stamp duty work? 🤔

Stamp duty is a progressive tax and is charged in ‘thresholds’ or bands. The amount you’ll pay depends on the final property price and which bands the price falls into. As a general rule, the more expensive the property is, the more stamp duty you’ll pay. Rates also vary depending on whether you’re a first-time buyer or next-time buyer and whether it’ll be your only home, a second home or buy-to-let property.

Stamp duty needs to be paid within 14 days of completion, when the property purchase is finalised. Your solicitor will pay stamp duty for you, but you’ll need to pay them back, so be sure to work it into your budget alongside the other costs of buying a home. As it’s a significant upfront cost, some buyers choose to add it onto their mortgage and borrow more to cover the bill. While this is an option, this means you’ll pay interest on your stamp duty amount, which can add up over the lifetime of your mortgage. If you’re not sure which option is right for you, it’s best to speak to a mortgage broker.


Stamp duty rates for first-time buyers 🏠

We’ve broken down the rates for SDLT in England and Northern Ireland below. If you’re buying a home in Scotland or Wales, you’ll pay similar taxes with different names and rates. In Scotland, you’ll pay Land and Buildings Transaction Tax (LBTT) and in Wales, you’ll pay Land Transaction Tax (LTT).

First-time buyers benefit from discounted rates – there’s no stamp duty to pay on properties up to £425,000, then you pay 5% on the next portion up to £625,000. If you’re buying a property worth more than £625,000, stamp duty will be charged at the standard rates for next-time buyers below.

To qualify as a first-time buyer, the property has to be the first one you’ve ever bought or owned, meaning you won’t be eligible if you’ve inherited property or your name is listed on the deeds of another property. If you’re buying a home with someone else, both of you will need to be considered first-time buyers to get the discount.


Here’s an example:

Arun is a first-time buyer and buys a property for £400,000. Thanks to the stamp duty discount for first-time buyers, he doesn’t pay any stamp duty at all! His brother is also buying his first home, but his property is worth £450,000. His stamp duty bill comes to £1,250:

  • 0% on the portion up to £425,000
  • 5% on the portion up to £450,000 (£25,000 x 0.05 = £1,250)


Stamp duty rates for next-time buyers 💰

Currently, stamp duty for next-time buyers kicks in at £250,000. There’s nothing to pay if you buy a home for less than £250,000 (or the first £250,000 of the property price). After that, you pay 5% on the next portion (up to £925,000). If you also own another home or a buy-to-let property on the side, you’ll usually pay an extra 3% stamp duty on top. Here’s how it breaks down.


Here’s an example:

Annie sells her flat and then buys her next home for £400,000 – her total stamp duty bill comes to £7,500:

  • 0% on the portion up to £250,000
  • 5% on the portion up to £925,000 (£150,000 x 0.05 = £7,500)


Lucy and her family buy their next home for £930,000 and the total stamp duty bill comes to a whopping £34,250:

  • 0% on the portion up to £250,000
  • 5% on the portion up to £925,000 (£675.000 x 0.05 = £33,750)
  • 10% on the portion up to £1.5m (£5,000 x 0.10 = £500)


Fun fact! Historically, documents had to be stamped to show that stamp duty had been paid and that documents were legally effective. Today, no stamps are needed – but it’s still an important home-buying cost to budget for.


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