Stamp Duty Land Tax (SDLT) is a tax you may pay when you buy a home or land in England or Northern Ireland above a certain price. Your conveyancer usually calculates it, submits the return and pays HMRC on your behalf around completion, so it shows up as one of the larger figures on your final statement. How much you pay depends on the price, whether you are a first-time buyer and whether you already own another property. This guide explains how it works, what changes it and why you should always check current rates before you budget.
1 What Stamp Duty is and when you pay it
Stamp Duty (SDLT) is a tax on buying property or land in England and Northern Ireland. It applies to most purchases above a set starting threshold, and it is charged in bands, so different slices of the price are taxed at different rates rather than the whole price at one flat rate. You pay it once, on completion, not as an ongoing cost.
It is almost always your own money, not the mortgage lender's. SDLT cannot usually be added to a standard residential mortgage, so you need the cash ready alongside your deposit and your conveyancing costs. On higher priced homes the amount can be large, which is why it pays to work it out early.
Wales and Scotland have their own separate taxes instead of SDLT, covered further down. If you are buying in either nation, the rules and thresholds are different.
2 What affects how much you pay
The three biggest factors are the purchase price, whether you are a first-time buyer, and whether the property is an additional one you will own. Each can move your bill up or down by a lot.
- Purchase price. SDLT is banded, so a higher price usually means more tax, and the rate on the top slice rises as the price rises.
- First-time buyer relief. If you and anyone you are buying with have never owned a home anywhere in the world, you may pay less, or nothing, up to a set price cap. Above that cap the relief can taper or fall away, so it is worth checking where you sit. Our first-time buyer's guide to conveyancing walks through the wider process.
- Additional property surcharge. If you are buying a second home, a buy-to-let or any property while still owning another, a higher rate normally applies on top of the standard bands. If you are replacing your main home but the sale and purchase overlap, you may be able to reclaim the extra later, within a time limit.
- Buyer status. Non-UK residents and companies can face different or higher rates again.
Because so much rides on your personal situation, two buyers paying the same price can owe very different amounts. A good conveyancer will confirm the right figure for you. If you are still choosing one, see how to choose a conveyancer.
SDLT thresholds, rates and reliefs are set by government and can change at any Budget, sometimes with little notice. Always check the current rates before you commit, and treat any figure you saw months ago as out of date.
3 How Stamp Duty is worked out
SDLT is calculated in slices, a bit like income tax, not as a single percentage of the whole price. Each portion of the price that falls within a band is taxed at that band's rate, then the slices are added together. So crossing a threshold by a small amount does not suddenly push the entire price up to a higher rate.
The chargeable amount is normally what you pay for the property, and in some cases it includes certain fixtures or other consideration.
First-time buyer, mover, or buying an additional property. This decides which set of rates applies.
Each slice of the price is taxed at the rate for its band under the rules in force on your completion date.
If the additional property rate applies, the surcharge is added across the relevant bands.
First-time buyer relief or other reliefs come off if you qualify, which can reduce or remove the bill.
The slices are combined to give the figure your conveyancer will report and pay.
You do not have to do this maths yourself. HMRC publishes a free SDLT calculator, and your conveyancer will confirm the exact figure for your purchase. Treat any estimate as a guide only until it is checked against the rates on your completion date.
4 Wales and Scotland: different taxes
SDLT only applies in England and Northern Ireland. Wales and Scotland have replaced it with their own devolved property taxes. The principle is similar, a banded tax on purchases above a threshold, but the names, bands and rates differ, so do not assume an English figure applies.
- Wales charges Land Transaction Tax (LTT), collected by the Welsh Revenue Authority. It has its own bands and its own treatment of additional properties, and it does not offer first-time buyer relief in the way England does.
- Scotland charges Land and Buildings Transaction Tax (LBTT), collected by Revenue Scotland, with an Additional Dwelling Supplement on extra properties.
Conveyancing practice and timescales also vary by nation, particularly in Scotland where the system works quite differently. If your move is in England or Wales, our step-by-step conveyancing process guide shows where the tax fits in.
5 Who files and pays it
Your conveyancer normally files the return and pays the tax for you, drawing the money from the funds you have sent them before completion. There is a strict deadline shortly after completion (a short window of days, so check the current rule), and missing it can mean penalties and interest. That is one reason most buyers leave it to their conveyancer.
In practice it works like this. Before completion you send your conveyancer the full amount needed: deposit balance, fees, disbursements and the SDLT. After completion they submit the SDLT return to HMRC and pay the tax, then send you the receipt. You will see SDLT itemised on your completion statement, separate from the legal fee and from disbursements such as searches and Land Registry charges.
Stamp Duty is often the single biggest extra cost after your deposit. Work out a realistic estimate before you offer, so it is never a surprise late in the process.
When you compare fixed-fee quotes through MoveGuide, the quote covers the conveyancer's legal work and you will see disbursements set out clearly. SDLT itself is a tax paid to government, so it sits on top of the quote. A clear quote just makes it easier to see what is the conveyancer's fee, what is a disbursement and what is tax.