What is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a tax you pay when purchasing property or land in England and Northern Ireland. Scotland has its own version called Land and Buildings Transaction Tax (LBTT), and Wales has Land Transaction Tax (LTT). Stamp Duty is one of the biggest upfront costs of buying a home — it can add thousands or even tens of thousands of pounds to your purchase price.
Current Stamp Duty Rates (2025/26)
- Up to £250,000 — 0% (no stamp duty)
- £250,001 to £925,000 — 5%
- £925,001 to £1,500,000 — 10%
- Over £1,500,000 — 12%
SDLT is calculated in bands (like income tax), not on the entire purchase price. So on a £400,000 property: £0 on the first £250,000 + 5% on £150,000 = £7,500 total SDLT.
First-Time Buyer Relief
- Properties up to £425,000 — No stamp duty at all for first-time buyers
- Properties £425,001 to £625,000 — 5% on the amount above £425,000 only
- Properties above £625,000 — No first-time buyer relief. Standard rates apply
- Who qualifies? — You have never owned a property anywhere in the world. Both buyers in a joint purchase must be first-time buyers
Example: A first-time buyer purchasing a £500,000 property pays 5% on £75,000 (the amount above £425,000) = £3,750. A non-first-time buyer pays £12,500 on the same property. That is £8,750 in savings.
Additional Property Surcharge
- Extra 3% on top of standard rates — Applies if you already own a property and are buying an additional one (buy-to-let, second home, holiday home)
- Example — A £300,000 buy-to-let: Standard SDLT would be £2,500. With surcharge: £2,500 + £9,000 (3% of £300,000) = £11,500
- Exception — If you sell your main residence within 3 years of buying the replacement, you can reclaim the surcharge
- Non-UK residents — Additional 2% surcharge on top of all other rates (total 5% extra for non-residents buying additional properties)
How to Reduce Your Stamp Duty Bill
- Negotiate the purchase price — £1,000 reduction in price near a threshold saves the SDLT on that amount. Every pound matters near band boundaries
- Separate fixtures and fittings — Negotiate to pay separately for items like carpets, curtains, and appliances. These are not subject to SDLT. Must be genuine and at fair value — HMRC does check
- Use first-time buyer relief — If eligible, this saves up to £8,750
- Transfer between spouses — Transfers between married couples and civil partners are SDLT-free
- Shared ownership — You can choose to pay SDLT only on the share you are purchasing initially, or on the full market value. Calculate which is cheaper based on your circumstances
- Timing — Watch for temporary SDLT holidays or relief changes announced in budgets. These have happened before (2020-2021 stamp duty holiday)