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Stamp duty land tax (SDLT) is a fixed sum of money paid to the government upon purchase of property or land.
For a limited time, in England and Northern Ireland, residential properties worth more than £250,000 require stamp duty to be paid upon purchase of the home (there is no stamp duty payable on homes priced less than this). This is a higher threshold than previous years, thanks to the current 'stamp duty holiday'. For first-time buyers, this limit is increased further to £425,000.
How much tax is due depends on the property price.
In Wales, the tax is known as the land transaction tax (LTT) and in Scotland as the land and buildings transaction tax (LBTT).
In September 2022, the Government announced a temporary reduction in stamp duty in England, meaning you’ll pay less or no stamp duty on new homes of a certain value.
In just over six months, on 31st March 2025, this temporary reduction will come to an end, meaning that you’re likely to pay significantly more SDLT after this date.
However, if you compete before 31st March 2025, you can still benefit from the stamp duty holiday and save thousands of pounds on your new Ashberry home.
Stamp duty applies to buyers who fall under a specific set of circumstances, usually based on the price of a property. However, there are exceptions to this. If you’re a first-time buyer, you will only pay stamp duty if the home you’re purchasing is above the value of £425,000 in England, or £175,000 in Scotland.
For buyers changing homes, any home in England over the value of £250,000 (£180,001 in Wales and £145,001 in Scotland) will require a stamp duty payment. If it’s an additional home that you’re purchasing, you’ll pay an even higher percentage of stamp duty – usually an additional 3% on top of the standard payment.
Stamp duty rates for new-build homes are no different from those of existing properties. However, the way they are calculated is different, due to the inclusion of land, property rate, and any optional extras you choose to have.
Fixtures and fittings – such as a new kitchen – are included in this. This means that if your home costs £240,000 but you spend £12,000 on extras, your home will fall above the stamp duty threshold (if you’re not a first-time buyer). You will then pay 5% stamp duty on the £2,000 above £250,000 – which, in this case, would be £100.
A stamp duty land tax return must be filed and the tax paid – usually by your solicitor – within 14 days of completion on your new home. If you fail to meet this deadline you may be charged interest and penalties. If no stamp duty is due, you will still need to complete a return, unless the purchase price of the property is less than £40,000.
When buying your first home you will not pay stamp duty on property costing up to £425,000 in England and Northern Ireland, or £175,000 in Scotland. If the price is above this, the amount you pay will depend on where you live. There is no first-time buyer relief in Wales.
In England and Northern Ireland you will pay 5% stamp duty, on anything up to £625,000. Property costing more than £625,000 does not attract first-time buyer relief at all, so you will pay the tax due
In Scotland you will pay stamp duty on property costing more than £175,000, according to that country’s standard rates.
If you are buying a home with somebody else then this has to be a first home for both of you for you to be considered first-time buyers.
First-time buyer buying a property under £300,000
Property value at point of purchase: £300,000
0% stamp duty to pay
First-time buyer buying a new property over £425,000
Property value at point of purchase: £500,000
0% stamp duty to pay up to £425,000
5% stamp duty to pay from £425,000 to £500,000 = £3,750
Total stamp duty payable = £3,750
If you are buying a new home to live in, and you have owned a home before, you will pay stamp duty on any property costing more than £250,000. If you are buying a home with someone else and it is not your first home, you will be eligible to pay stamp duty even if they are a first-time buyer.
Current homeowner buying a property under £250,000
Property value at point of purchase: £250,000
0% stamp duty to pay up to £250,000
Total stamp duty to pay = £0
Current homeowner buying a property over £250,000
Property value at point of purchase: £295,000
0% stamp duty to pay up to £250,000 of the value
5% stamp duty to pay from £250,000 to £295,000 = £2,250
Total stamp duty to pay = £2,250
Is stamp duty payable on leasehold properties?
The tax is due on all properties costing over £250,000, whether they are freehold or leasehold. There may be an extra charge on leasehold properties; your solicitor may be able to advise you if this applies to you.
What is the lower threshold for standard rate stamp duty?
Homes valued at £250,001 will have the standard rate stamp duty applied, which will be 5%.
How do I calculate how much stamp duty I will have to pay?
The Government stamp duty calculator is a useful tool for determining how much stamp duty you will have to pay: https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax
If I haven’t sold my current home before I buy my new one, will I have to pay duty at the higher rate on my new property?
Yes, you will be liable for a higher rate stamp duty on your new home as it is in effect a second residential property. However, if you subsequently sell your first home then you can apply for a refund of the higher rate portion of the duty paid.
The time limits for this are three years in England.
Is the change applicable to second homes?
No. Second homes will still attract an Additional Dwelling Supplement (ADS) levy, which remains unchanged.
The property I’m buying is above the £25,000 threshold – how much LBTT will I pay?
This depends on the value of the property you are buying, but until 31st March 2021 the standard bands are 5% for homes costing £250,001 - £325,000, 10% for homes costing £325,001 - £750,000 and 12% for homes costing over £750,000.
Do I still have to submit a tax return if there is no LBTT due?
Yes, any home costing more than £40,000 requires you to submit an LBTT return to Revenue Scotland and this does not change as a result of the new nil-rate band.
Is the change applicable to second homes?
No. Second homes and buy-to-let properties will continue to be subject to an additional levy of 3% above standard LTT rates.
The property I’m buying is above the £250,000 threshold – how much LTT will I pay?
This depends on the value of the property you are buying, but until 31st March 2021 the standard bands are 0% for homes costing up to £250,000, 5% for homes costing £250,001 - £400,000, 7.5% for homes costing £400,001 - £750,000, 10% for homes costing £750,001 - £1.5m and 12% for homes costing over £1.5m.
Do I still have to submit a tax return if there is no LTT due?
Yes, any home costing more than £40,000 requires you to submit an LTT return to the Welsh Revenue Authority and this does not change as a result of the new nil-rate band.
*All information contained on this page and our websites is correct at time of broadcast (23.09.24) and is subject to change without notice. Subject to contract progression, house completion date and buyer status. Speak to your sales advisor for further information. This information does not constitute financial advice or recommendation and should not be considered as such.