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. Stamp duty hit the headlines throughout the Covid-19 pandemic, with the government introducing a stamp duty holiday to try and stimulate the housing market. It worked – so much so that the government announced a further extension in this year’s Budget. 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 thresholds 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 on your behalf, 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 with a mortgage adviser.


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 always benefit from discounted rates – there’s 0% to pay on properties up to £300,000, then 5% to pay up to £500,000. If you’re buying a property worth more than £500,000, stamp duty will be charged at the standard rates for next-time buyers below. To be considered 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 qualify.


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, his stamp duty bill comes to £5,000:

  • 0% on the portion up to £300,000
  • 5% on the portion up to £500,000 (£100,000 x 0.05 = £5,000)


Stamp duty rates for next-time buyers 💰

Here’s a reminder of the standard stamp duty rates for next-time buyers:


Here’s an example:

Chris buys a property for £300,000 and his total stamp duty bill comes to £5,000:

  • 0% on the portion up to £125,000
  • 2% on the portion up to £250,000 (£125,000 x 0.02 = £2,500)
  • 5% on the portion up to £925,000 (£50,000 x 0.05 = £2,500)


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.



Your home may be repossessed if you do not keep up repayments on your mortgage.