What Is Stamp Duty?
Stamp Duty Land Tax (SDLT) is a government tax paid when you buy a residential or non-residential property or land in England or Northern Ireland. If you’re purchasing in Scotland, you’ll pay Land and Buildings Transaction Tax (LBTT). In Wales, it’s known as the Land Transaction Tax (LTT).
The amount of Stamp Duty you’ll pay depends on:
- The purchase price of the property
- Whether you’re a first-time buyer
- If the property is a second home or buy-to-let
- The type of buyer you are (individual or company)
Key Stamp Duty Facts
- Only buyers pay Stamp Duty, not sellers.
- Stamp Duty cannot be claimed back through Income Tax.
- There is no VAT on Stamp Duty.
- Your solicitor typically handles the Stamp Duty return and payment on your behalf.
When Do You Pay Stamp Duty?
Stamp Duty must be paid within 14 days of completion of your property purchase. This deadline is enforced by HMRC, and failure to pay on time could result in penalties or interest charges.
The process involves submitting a Stamp Duty Land Tax return even if no tax is due (unless the purchase is exempt). In most cases, your solicitor will complete and file this return for you as part of the conveyancing process.
Why Do You Have to Pay Stamp Duty?
Originally, Stamp Duty was introduced to cover the cost of stamping official documents. Today, it’s a significant revenue source for the UK government.
You can’t legally transfer ownership of a property without paying any Stamp Duty owed. HMRC won’t issue key legal documents, such as the Certificate of Land Ownership, until the tax is paid in full.
Who Needs to Pay Stamp Duty?
You’ll need to pay Stamp Duty if you’re buying a property or land above a certain threshold, depending on your circumstances:
You must pay SDLT if:
- The purchase price is over £250,000 (or £125,000 for buy-to-let or second homes)
- You’re buying your main home
- You already own property and are buying another (e.g., second home, holiday home)
- You’re purchasing buy-to-let property
- You’re buying through a limited company
- You’re buying a shared ownership or new build property
- You’ve been added to a property deed or mortgage
You’ll pay a 3% surcharge if:
- You’re buying a second home
- You’re a landlord buying to let
- You’re purchasing a property via a limited company
Stamp Duty Exemptions
You won’t need to pay Stamp Duty in the following cases:
- You’re a first-time buyer purchasing a home worth £300,000 or less
- You’re inheriting property (subject to Inheritance Tax, not Stamp Duty)
- You’re transferring property as part of a divorce settlement
- You’re buying a freehold property worth £40,000 or less
- You’re granted a lease of 7 years or more, where the premium is £40,000 or less and rent is under £1,000 per year
Stamp Duty Relief – Are You Eligible?
Some buyers may qualify for Stamp Duty relief. Common scenarios include:
- First-time buyer relief: For homes up to £500,000
- Multiple dwellings relief: When buying more than one property in linked transactions
- Right-to-buy purchases: Discounted public sector home purchases
- Charity purchases: Where land/property is used for charitable purposes
- Employer relocation: When a company buys an employee’s home
- Forced sales: E.g., compulsory purchase by a council
- Transfers between companies: As part of a business restructure
Current Stamp Duty Rates (As of 2025)
Standard Residential Rates (For Primary Residence):
| Property Price | Stamp Duty Rate |
| Up to £250,000 | 0% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5 million | 10% |
| Over £1.5 million | 12% |
First-Time Buyer Rates:
| Property Price | Stamp Duty Rate |
| Up to £300,000 | 0% |
| £300,001 – £500,000 | 5% |
If the property value exceeds £500,000, first-time buyer relief does not apply.
Additional Property Surcharge:
If you are buying a second home or investment property, you’ll pay a 3% surcharge on top of standard rates.
Can I Add Stamp Duty to My Mortgage?
Yes, it is possible to add the Stamp Duty cost to your mortgage loan. However, this increases your borrowing, which can:
- Affect your loan-to-value ratio (LTV)
- Limit your access to better mortgage deals
- Increase your monthly payments due to added interest over the loan term
Always speak with a mortgage adviser before deciding to add Stamp Duty to your mortgage.
Do You Pay Stamp Duty on Shared Ownership or New Builds?
Yes. Stamp Duty applies whether you’re buying a shared ownership property or a new build. However, you may be able to choose between:
- Paying on the full market value
- Paying on the share you are purchasing (with more due if your share increases)
An adviser can help you choose the most cost-effective option.
Can You Avoid Paying Stamp Duty?
Stamp Duty is a legal requirement. Trying to avoid it through artificial schemes or under-reporting can lead to serious fines or legal issues.
The only way to legitimately reduce or avoid Stamp Duty is to qualify for exemptions or reliefs.
Need Help with Stamp Duty?
At Orchard Mortgage Solutions, we offer tailored advice on all aspects of your property purchase, including Stamp Duty. Whether you’re a first-time buyer, an investor, or purchasing through a limited company, our experienced mortgage advisers will walk you through:
- How much Stamp Duty you’ll need to pay
- What reliefs or exemptions you might qualify for
- Whether adding Stamp Duty to your mortgage is right for you
Speak to a Mortgage Expert Today
Understanding Stamp Duty is a vital part of the home-buying process. If you’re unsure about how it affects your purchase, contact Orchard Mortgage Solutions for expert advice and personalised guidance.
? Call us today 01257 543013 to speak with one of our expert advisers
? Or use our contact form to arrange a no-obligation consultation
