Everything You Need to Know About Stamp Duty

Buying a home can feel like a minefield and it’s very likely to put a strain on your finances. A key element that you’ll need to factor in when thinking about buying your perfect home is being able to afford the stamp duty on top of the other financial requirements (deposit, legal fees, moving costs, etc).

To help you learn more about what stamp duty is and how much you’ll need to pay (because they don’t teach us this stuff in school!), we’ve put together this guide to help.

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What is stamp duty?

When you buy a property in the United Kingdom, there is a tax charged. In England and Northern Ireland, that tax is usually referred to as stamp duty however in Wales and Scotland it is better known as ‘land tax transaction’ or ‘land and buildings tax transaction’ respectively.

From 2014 onwards, the United Kingdom has been using a progressive stamp duty rate system. This can make your stamp duty more difficult to calculate as rather than paying a single rate on the entire property price, depending on the cost of the property you could pay one rate on a certain portion of the property and a different rate on another.

How much stamp duty would I pay as a first-time buyer?

Stamp duty can feel particularly confusing for first-time buyers. Here’s what you need to know when purchasing your first home.

England and Northern Ireland

For first-time buyers purchasing their main residential property, there’s no stamp duty on the first £300,000 (provided the property you’re buying costs £500,000 or less).

Wales

First-time buyers pay no land transaction tax on the first £180,000 of a property.

Scotland

First-time buyers pay no land and buildings transaction tax on the first £175,000 of a property.

What are the stamp duty rates in England and Northern Ireland?

As of October 1^st 2021 (when Covid-related stamp duty holidays and discounts end), you’ll be required to pay the following for your main residential home:

For house purchase price up to £125,000 (£300,000 for first-time buyers) – 0%
For house purchase price between £125,001 and £250,000 – 2%
For house purchase price between £250,001 and £925,000 – 5%
For house purchase price between £925,001 and £1,500,000 – 10%
For house purchase price higher than £1,500,001 – 15%

What are the stamp duty rates in Wales?

When buying your main residential home in Wales, you’ll be required to pay the following land transaction tax:

For house purchase price up to £180,000 – 0%
For house purchase price between £180,001 and £250,000 – 3.5%
For house purchase price between £250,001 and £400,000 – 5%
For house purchase price between £400,001 and £750,000 – 7.5%
For house purchase price between £750,001 and £1,500,000 – 10%
For house purchase price higher than £1,500,001 – 12%

What are the stamp duty rates in Scotland?

When buying your main residential home in Scotland, you’ll be required to pay the following land transaction tax:

For house purchase price up to £145,000 (£175,000 for first-time buyers) – 0%
For house purchase price between £145,001 – £250,000– 2%
For house purchase price between £250,001 and £325,000 – 5%
For house purchase price between £325,001 – £750,000– 10%
For house purchase price higher than £750,001 – 12%

When must stamp duty be paid?

It’s important to be aware that when you buy a home in England or Northern Ireland you have a 14-day period in which to pay your stamp duty. The period starts on the date on completion/date of entry when all contracts have been signed and you receive the keys to your new home.

If you don’t pay your stamp duty within 14-days, you could be at risk of receiving a fine and having to pay additional interest on top of the standard fee.

The good news is that your solicitor should be there to support you through the process and to make sure your stamp duty is paid on time. Many will ask for the funds before you have completed your property purchase to make sure you have the finances available.