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What is Stamp Duty – how much does it cost and when should I pay it?

    A little bit of history

Stamp Duty was introduced in 1694 as a way of raising money to pay for the war against France and was used on various goods, not just houses. Despite it only being a temporary way of raising money, it’s success meant that it’s stayed in place and has now become a permanent form of taxation in the UK. It is called ‘Stamp’ Duty because they used to physically stamp a document to confirm the tax had been paid.

    Who pays Stamp Duty?

In England and Northern Ireland, you’re liable to pay Stamp Duty Land Tax (SDLT) if you buy a residential property or a piece of land costing more than £125,000, and if you buy a non-residential or mixed-use property or land costing more than £150,000. 

It’s different in Scotland where there is Land and Buildings Transaction Tax, and in Wales where there is Land Transaction Tax instead of Stamp Duty.   

You are also liable to pay Stamp Duty if you buy additional residential properties with a cost of £40,000 or more, such as a second home or a buy-to-let property. With these, the rates of Stamp Duty are increased, with an extra 3% added to each band on top of the current rates. This also applies if you buy a new home before selling your old one.  

    How much does Stamp Duty cost?

The total sum of Stamp Duty Land Tax you’ll need to pay depends on the purchase price of the property. The higher the cost of the property, the more you’ll have to pay.

You’ll have to pay from as little as 0% on properties that cost less than £125,000, up to as much as 12% on a percentage of the cost of a property that costs over £1.5 million. We’ve listed the details of each bracket and the relevant % for you below:

House Price Band

Stamp Duty Rate (second residential property)

less than £125,000

0%  (less than £40,000 - 0%/over £40,000 - 3%)

£125,001 to £250,000

2%     (5%)

£250,001 to £925,000

5%     (8%)

£925,001 to £1.5 million

10%  (13%)

Over £1.5 million

12%  (15%)


So, let’s break it down as an example:

Say you buy a house costing £550,000.

You won’t need to pay any SDLT on the first £125,000

You'll need to pay 2% on the next £125,000

You'll then need to pay 5% on the remaining £300,000

So the total SDLT you'll pay will be £17,500


The rates above don’t apply to second homes as an extra 3% is added to each band for properties and land costing over £40,000. For example, if you buy a second home for £200,000

You won’t pay SDLT on the first £40,000

You'll need to pay 3% on the next £85,000

You'll then need to pay 5% on the remaining £75,000

So the total SDLT you'll pay will be £7,500


    Stamp Duty relief for first-time buyers

If you’re a first-time buyer, you’re in luck! You’ll be eligible for stamp duty relief, which means you won’t have to pay stamp duty on any properties bought for £300,000 or less. If you’re buying a property worth up to £500,000 you’ll have to pay stamp duty on the remaining £200,000. However

, if the cost of the property is more than £500,000, you’ll have to pay the normal stamp duty rates even if you’re a first-time buyer, so make sure you consider this and any associated costs when you’re working through your budget.

    When and how do you pay Stamp Duty?

You'll need to submit a Stamp Duty Land Tax return to HMRC and pay the tax within 30 days of completing the purchase of your new home. You can ask your solicitor, agent or conveyor to organise this for you – or if you’re using Shieldpay, this all happens for you automatically, in real time. If you fail to submit the return or pay the tax you may receive penalties or be charged interest, so make sure you get it sorted.


Shieldpay protects both buyer and seller in any transaction so that you can deal with anyone, anywhere with total confidence.

How do we do it? We verify the identity of both sides, funds are held securely in the Shieldpay vault and only released when both sides agree they’re happy. If anything doesn’t go to plan, we help out with any disputes!

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