Last updated: Jan 23, 2023

Stamp Duty: who pays it? when? and how much?

Michael Harms AFPS
Director & Chartered Financial Planner at Mortgages for Doctors

Stamp Duty: Who Pays It? When? And How Much?

page with stamp duty rates written down

What is Stamp Duty?

Stamp Duty (Stamp Duty Land Tax, sdlt) is a tax levied on the purchase price of the house or land you are looking to buy.

It's called Land and Buildings Tax in Scotland and Land Transaction tax in Wales.

You have to pay these taxes when:

  • You buy a new or existing leasehold
  • You buy a freehold property
  • You buy a property through a shared ownership scheme
  • You transfer land or property in exchange for payment, e.g. you buy a share in a house.

Do first-time buyers pay stamp duty?

Well, it depends!

As of January 2023, if you are first time buyers, you won't pay any stamp duty if you buy a residential property worth less than £425,000. If the property purchase price is above this level, but below the upper threshold of £625,000, you will still benefit by not paying stamp duty on the first £425,000.

If you are not first time buyers the threshold is lower at £250,000.

For example, as first time buyers:

If the property price was £325,000 there is £0 stamp duty to pay. If the property price was £525,000, you would only pay stamp duty on the difference between £525,000 and the threshold of £425,000 mentioned above.

If you're unsure how to calculate stamp duty, then you can use this calculator to work out the costs for you.

Stamp duty thresholds and rates have changed since 23rd September 2023.

If you are not a first time buyer, the rates are as follows:

list of stamp duty rates
list of the stamp duty percentage rates for first time buyers

Stamp Duty Tax Calculation Examples (non first time buyers)

If you buy a property for £450,000, you would pay 0% stamp duty on the first £250,000.  You will pay 5% on the difference between £250,000 and £450,000.  Therefore, you would pay: £200,000 x 5% = £10,000 stamp duty.

If you buy a property for £300,000, you would pay 0% stamp duty on the first £250,000.  You will pay 5% on the difference between £250,000 and £300,000.  Therefore you would pay: £50,000 x 5% = £2,500 stamp duty.

How much stamp duty do I pay on a second home?

Stamp tax on second homes you will have to pay additional stamp duty of 3% to cover this extra cost.

Stamp duty - Additional property, buy to let

If you purchase a buy to let property, there is an additional rate of stamp duty to pay.  This higher rate of stamp duty is 3% on top of the standard rates.

list of higher stamp duty rates in a table
list of stamp duty rates for second homes and additional properties

Stamp duty calculations - second home and buy to let properties

If you buy an additional property for £450,000, you would pay 3% stamp duty on the first £250,000.  You will pay 8% on the difference between £250,000 and £450,000.  Therefore, you would pay:

£250,000 x 3% = £7,500

£200,000 x 8% = £16,000

Total £23,500.

If you buy a property for £300,000, you would pay 3% stamp duty on the first £250,000.  You will pay 8% on the difference between £250,000 and £300,000.  Therefore you would pay:

£250,000 x 3% = £7,500

£50,000 x 8% = £4,000

Total £11,500

You can see from these calculations that stamp duty is far more expensive for you when purchasing a second home or buy to let property.

What happens if the second home becomes my main residence?

Firstly, on purchasing the second home, you will incur the additional property stamp duty.  If this becomes your main residence, and you sell your original  main home within 3 years of buying the second home, you could apply for a refund of the higher stamp duty rates.  There are certain rules around this so it is best to check the government website through the refund link above for further information on this.

Does stamp duty apply to fixtures and fittings?

Stamp duties do not apply for removing furnishings or “chattels” such as free-standing furniture. This includes accessories including bathroom and kitchen accessories as well as the fitted wardrobe. If the removal of the fixtures is removed you will be billed a lower bill – this is the total value of the unit in the property. Typically when carpet is included in a sale of a house, the purchaser and seller must settle on an accurate pricing that reflects their age and quality and subtract from their price total.

When is stamp duty paid?

The stamp tax for property purchased for more than an agreed amount will have to be paid to the HMRC at the earliest opportunity 14 days from the date you purchased the property. You can get legal advice from your lawyer to help you avoid a delay in your application. Sometimes buyers want stamp duty tax added into their home loans. Contact the mortgage company. Stamp Duty Land Taxes are progressively taxed tax on property bought in England, Northern Ireland or England and Wales. The different levels apply to non-resident properties and mixed use land.

Are there special stamp duty rates for doctors?

Unfortunately not.  This is a universal tax applied for doctors and the entire UK population.  There are however some really good house purchase schemes which could significantly help reduce the cost of the buying a residential property such as the first homes scheme.   By looking for homes using schemes like the first home scheme, you can reduce the cost of purchasing a house by 30-50% in some cases.  This would impact the level of stamp duty you may pay and the best option for key workers to look into.

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If you are reading this blog, it is likely you are thinking about buying a home for the first time, or moving house and want to know more.  If you would like to discuss your circumstances further, please contact us for a chat with one of our advisers.  This is a free service and you can book a video call at a time convenient for you here.

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