What is stamp duty? Stamp duty is a tax paid by buyers when they buy property. The tax is paid on top of what you paid for the house or flat, so it’s important to understand so you can add it to your budget. 

Let’s take a closer look at what stamp duty is, how much you’ll pay and when you’ll have to pay it. 

What is stamp duty?

The payment of stamp duty makes more sense if you understand what it is. The proper name for stamp duty is “stamp duty land tax” which is often abbreviated to SDLT. It is a tax paid on the transaction, as opposed to a tax paid on the property or land. Historically, the papers relating to the transaction were stamped, hence the term “stamp duty.” 

Who pays stamp duty – the buyer or the seller?

The buyer pays the stamp duty, on top of the price of the property. 

How much stamp duty will I have to pay? 

The amount you pay depends on the value of the property. At time of writing, there are different rules for first time buyers too, but this could change in 2025.

If you are buying a property for less than £250,000, there is no SDLT to pay. 

After that, you pay SDLT on the amount that is over the threshold. For example, if you buy a property for £260,000, you would only pay SDLT on the £10,000 that takes you over the threshold. You do not pay SDLT on the whole amount.

SDLT is calculated as a percentage of the amount you’re paying that is over the threshold. These percentages increase with the amount you pay for the property.

If the property price is between £250,001 and £925,000, you would pay 5% of the value as SDLT. Remember to subtract the first £250k, then find 5% of the amount you’re left with. This will give you the amount of SDLT you would pay. 

If the property price is up to £1.5 million, you would pay nothing on the first £250,000, 5% on the amount up to £925,000 and 10% on the amount up to £1.5 million. 

If the property price is above £1.5 million, you would pay nothing on the first £250,000, 5% on the amount up to £925,000, 10% on the amount up to £1.5 million and 12% on anything over that. 

And if that makes your head spin (!), use HMRC’s stamp duty calculator here.

First-time buyers

Under the Conservative government, first-time buyers purchasing a property worth up to £425,000 did not have to pay SDLT. First-time buyers were also given a lower rate of tax (5%) when buying properties over £425k threshold. Then, in the run up to the 2024 general election, Labour pledged to lower this figure if they were voted in. 

It’s important to remember that the £425k threshold is protected until 2025. If you’re considering buying your first home, making your move now will enable you to avoid a higher rate of stamp duty. 

Stamp duty on second homes

If the purchase of the new property will leave you owning more than one home, you will have to pay an additional 3% on top of any other SDLT you pay. 

However, if you sell the first property within 36 months, leaving you owning just one property, you are entitled to apply to have the additional 3% refunded. 

Can I use my mortgage to cover stamp duty?

In theory, yes, you can apply for a larger mortgage to cover the cost of stamp duty as well as the cost of the property. However, borrowing more money increases the amount you have to pay back, and the interest on it too. It’s also worth remembering that the less money you need to borrow, the easier it is to find a lender. Think carefully, get professional mortgage advice and consider all your options. 

When do I pay SDLT?

HMRC says that buyers must pay SDLT within fourteen days of completing the sale of the property. However, some mortgage lenders insist that it is paid on the day of completion. Check with your lender so you know what to pay and when. 

Buy and sell property in Guildford

If you have property to sell in Guildford, Cobbles would love to help! Explore our site to find out more about what we offer, or give us a call on 01483 457 000 to get the ball rolling.