Stamp duty explained

Who pays stamp duty?

It is always the buyer that is required to pay stamp duty, not the seller. When you buy a property, it is usually your solicitor who deals with the stamp duty return on your behalf - although you can do it yourself. As part of this process, your solicitor will return any payment you are owed.

Do first-time buyers pay stamp duty?

If you’re a first-time buyer in England or Northern Ireland, you won’t pay stamp duty tax on primary residential properties worth up to £425,000.

For properties costing up to £625,000, you won’t be required to pay stamp duty on the first £425,000. You will however pay 5% stamp duty tax on the remaining amount, up to £200,000.

For example, if you buy a property for £525,000, you wouldn’t pay tax on the first £425,000. However, you would need to pay 5% on the remaining £100,000, so your total stamp duty bill would be £5,000.

If the property you’re buying is worth over £625,000, you will need to pay the standard rates of stamp duty on the full amount and won’t qualify for first-time buyers’ relief.

These rules are subject to change though.

What is the stamp duty threshold?

Stamp duty thresholds are simply the limits that determine how much tax you will need to pay on your property purchase. If the value of your property is less than the base threshold, you won’t need to pay any stamp duty. If your property exceeds other thresholds, you may need to pay more.

Currently, these rates don’t apply to first-time buyers.

The table below shows the current stamp duty rates that will apply if the home you are buying will be the only residential property you own.

When do you have to pay stamp duty?

If you need to pay stamp duty on your property purchase, you need to file a Stamp Duty Land Tax (SDLT) return within 14 days of completion of the purchase.

Your solicitor will usually file your return and pay the tax on your behalf, and add the amount to their fees. If this is not the case, you can file a return to HM Revenue and Customs (HMRC) and pay the tax yourself.

If you don’t submit a return and pay your stamp duty tax within 14 days of completion, HMRC may charge you penalties and interest.

While it is common for the solicitor carrying out your conveyancing to pay the tax on your behalf, it is your responsibility to make sure that the stamp duty is paid.

Can I add stamp duty to my mortgage?

Yes, you can add stamp duty to your mortgage – but you may incur interest charges. Depending on the length of your mortgage term, this can become quite costly, so it may be cheaper to pay straight away if you can.

If you’re unable to pay your stamp duty tax up front, it’s quite common to add it to your mortgage alongside any other fees you will have to pay.

Can I claim back stamp duty?

Yes, if you are eligible for a refund. You may be able to claim for a stamp duty refund if you purchased a new property without selling your previous property, but then sold that property within a three-year period.

To claim a stamp duty refund, you will need to complete an SDLT return and send it to HMRC either online or by post. You can find the SDLT return form on the official government website. You can hire a solicitor or conveyancer to carry out the return for you, but it is your responsibility to organise.