Stamp duty explained


If you're buying a home in the UK, you'll need to be aware of stamp duty and budget for it if necessary. But what exactly is stamp duty? How do you know how much the taxman wants and how to pay him? Stephen gives you the land tax lowdown...

What is stamp duty?

Stamp Duty Land Tax (SDLT) - to give it its full name - is a tax applied by the Government to all property transactions in England, Wales and Northern Ireland over a certain value. Stamp duty's been around for hundreds of years - you used to get a physical stamp or seal applied to your sale documents to recognise that payment had been made, hence the name. Nowadays these transactions happen electronically, but the tax remains.

Things are slightly different in Scotland, but the principle's the same. There is still a tax to pay on the value of property purchases, but since April 2015 it's been known as Land and BuildingsTransaction Tax (LBTT).

What does it cost?

Stamp duty is an ad valorum tax which - you’ll remember from Latin at school - means the amount of tax you'll pay depends on the price of what you’re buying. The tiered model applies to both the Scottish tax and the one covering the rest of the country.  Both taxes levy a percentage charge on portions of the overall price, but the bands are slightly different, as you can see below.

Stamp Duty Land Tax (applicable in England, Wales and Northern Ireland)
Portion of purchase priceRate payable on portion of price
Up to £125,000 0%
£125,000.01 - £250,000 2%
£250,000.01 - £925,000 5%
£925,000.01 - £1,500,000 10%
£1,500,000.01 + 12%


So if you were buying a house in England, Wales or Northern Ireland costing £275,000, you’d work out the Stamp Duty payable like this:

  • 0% tax on the first £125,000, so £0.
  • 2% on the portion of the price between £125,000.01 and £250,000, so £2,500.
  • 5% on the portion of the price over £250,000, so £1,250.
  • The total payable would then be £3,750.

If maths isn’t your strong point, there’s a handy Stamp Duty calculator on the Money Advice Service website.

Land and Buildings Transaction Tax (applicable in Scotland)
Portion of purchase priceRate payable on portion of price
Up to £145,000 0%
£145,000.01 - £250,000 2%
£250,000.01 - £325,000 5%
£325,000.01 - £750,000 10%
£750,000.01 + 12%


Taking the same property value of £275,000, Land and Buildings Transaction Tax in Scotland would be calculated like this:

  • 0% tax on the first £145,000, so £0.
  • 2% on the portion of the price between £145,000.01 and £250,000, so £2,100.
  • 5% on the portion of the price over £250,000, so £1,250.
  • So, the total payable would be £3,350.

Revenue Scotland have an LBTT calculator on their website that may prove helpful.

What if I’m buying a second property?

Both SDLT and LBTT impose an extra 3% on the usual rates for additional properties, so the scale starts at 3% and rises through the bands at 5%, 8%, 13% and 15%.  Second properties priced at £40,000 or below are zero-rated.

How to pay

Wherever you are in the country, you’ll have 30 days from completion of your purchase to pay your land tax.  It’s likely that your solicitor or conveyancing firm will transfer your funds to HMRC or Revenue Scotland, but it’s your responsibility to ensure the payment is made. If you need to arrange payment yourself, there are various ways this can be done. Follow the links below to find out more.  Remember that some payment methods may take longer to clear than others, so bear in mind your deadline.  It’s also worth noting that you may be required to file details of your transaction even if the cost is in the 0% band.

Adding the cost of the tax to your mortgage

People often decide to add the cost of SDLT or LBTT to their mortgage. But there are a few things you consider before rushing into this.

Firstly, you’ll end up paying interest on the tax.  With most mortgages running for 25 years, you could end up paying your lender back considerably more than originally levied.

Secondly, you need to think about what impact adding the cost could have on your loan-to-value (LTV).  Adding extra costs to your mortgage value can move your LTV by a few per cent, which could in turn have an impact on the deals that lenders can offer you.

Are there any exceptions to paying SDLT or LBTT?

The vast majority of residential freehold or leasehold property purchases will be subject to SDLT or LBTT.

There are some reliefs and exemptions on Stamp Duty and Land and Buildings Transaction Tax but they’re for very specific situations.

As always, if you need help on your own circumstances, you should seek independent financial advice.

If you would like to talk about a TSB mortgage, you can make an appointment with one of our mortgage advisors. Remember that your home could be at risk if you don't keep up repayments on a mortgage or other loan secured against it.



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