Depending on the value of your new home you may have to pay a government tax called Stamp Duty. Stamp Duty is a government charged tax and is applicable in England and Wales for homes that cost more than £125,000. Scotland also has a government tax, the Land and Buildings Transaction Tax (LBTT), which comes into force when your new home costs more than £145,000.

Understanding Stamp Duty

Stamp Duty is collected to reflect the work that goes into changing the land ownership of your property from the developer or previous property owner to you. All land needs to be legally registered with the Land Registry. To complete the Land Registry process requires a certificate from HMRC, which is what the fee from the Stamp Duty pays for. This is a piece of background work that is completed by your solicitor as part of your house purchase and something you do not have to initiate yourself.

First-time buyers

As of November 22nd 2017, if you are a first-time buyer you will pay no Stamp Duty on the purchase of your first home if the purchase price is £300,000 or less. For properties costing up to £500,000, you will not have to pay any Stamp Duty on the first £300,000, however a 5% Stamp Duty will apply on the portion of the property's value from £300,001 to £500,000.

For example, if you are a first-time buyer and buy a house for £400,000, the Stamp Duty you owe will be calculated as follows:

  • 0% on the first £300,000 = £0
  • 5% on the next £100,000 = £5,000
  • Total Stamp Duty to pay = £5,000

How much is Stamp Duty?

In England and Wales, Stamp Duty rates increase on a sliding scale based on the price of the property being purchased, unless you are a first-time buyer, in which case the above rules apply for property purchases up to £500,000.

If you are a first-time buyer and you are purchasing a property with a value over £500,000, the normal Stamp Duty rates apply for people who've bought a home before as outlined below.

Purchase Price Stamp Duty Rates
Up to £125,000 0%
£125,001 to £250,000 (the portion from £125,001 to £250,000) 2%
£250,001 to £925,000 (the portion from £250,001 to £925,000) 5%
£925,001 to £1.5 million (the portion from £925,001 to £1.5 million) 10%
More than £1.5 million (the portion above £1.5 million) 12%
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