Stamp Duty Land Tax (SDLT), commonly known as stamp duty, is a tax on all property. While it’s commonly thought of as a non-refundable charge, there are circumstances where buyers can claim a refund. This guide covers everything you need to know about stamp duty, its exceptions, and steps to claim back what you may be eligible for.
What is stamp duty?
Stamp duty is a tax the buyer pays for purchasing a property in the UK over a certain value. It’s based on percentages, and these differ between countries. If buying a property in England and Northern Ireland you’ll pay Stamp Duty Land Tax (SDLT), in Scotland it’s called Land and Building Transaction Tax (LBTT) and in Wales you’ll pay Land Transaction Tax (LLT).
Who pays stamp duty?
You may need to pay this tax when you:
- Buy a property, both outright and with a mortgage
- Purchase property or piece of land costing more than £40,000
- Buy a freehold or leasehold property
- Buy through shared ownership or pay for a share in a property.
Stamp duty rates
The amount you pay on stamp duty will depend on the value of the property you buy, whether it’s your first time on the property ladder, where in the UK you’re buying the property and whether you intend to live in the property or rent it out. You can find out how much you’re likely to pay using a stamp duty calculator at gov.uk.
Your financial adviser can advise on stamp duty thresholds and guide you on how much you’re expected to pay based on the number of properties you have and the value of them.
Stamp duty varies between different UK nations. Here’s how the thresholds vary.
England and Northern Ireland
| Property purchase price | Stamp duty rate for main residence | Stamp duty rate for second / additional property |
|---|---|---|
| Up to £250,000* (425,000 for first-time buyers**) | 0% | 5% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 to £1,500,00 | 10% | 15% |
| Over £1.5 million | 12% | 17% |
*Details as of October 31st 2024. This will change to 2% for main residence if the property is valued between £15,001-£250.000 from 31st March 2025.
**If you’re a first-time buyer in England or Northern Ireland, you could be eligible for called ‘first-time buyers’ relief’ if the property is no more than £625,000. This means you’ll pay no stamp duty on property purchases up to £425,000 and 5% between £425,000 and £625,000. If the purchase price is more than £625,000, you cannot claim the relief and you must pay the standard rates on the total purchase price.
Scotland
The main difference between the Land & buildings transaction tax rates in Scotland and the SDLT in England and Northern Ireland is the thresholds change for rates. All three countries offer additional relief for first time buyers.
| Property purchase price | Stamp duty rate for main residence | Stamp duty rate for second / additional property |
|---|---|---|
| Up to £145,000 (£175,000 for first-time buyers) | 0% | 6% |
| £145,001 – £250,000 | 2% | 8% |
| £250,001 – £325,000 | 5% | 11% |
| £325,001 – £750,000 | 10% | 16% |
| Over £1.5 million | 12% | 18% |
Wales
Last transaction tax rates in Wales differ to England, Northern Ireland and Scotland. You also do not get to benefit from any extra tax relief if you’re a first time buyer.
| Property purchase price | Stamp duty rate for main residence | Stamp duty rate for second / additional property |
|---|---|---|
| Up to £225,000 | 0% | 4% (on the portion up to £180,000) 7.5% (on the portion between £180,001 and £250,000) |
| £225,001 – £400,000 | 6% | 9% |
| £400,001 – £750,000 | 7.5% | 11.5% |
| £750,001 – £1,500,000 | 10% | 14% |
| Over £1.5 million | 12% | 16% |
What changes were announced in the 2024 Autumn Budget?
In October 2024, two key stamp duty updates were introduced:
- Second-home buyers will pay 5% on properties valued over £250,000, a rise of 2%. This is effective as of 31st October 2024.
- First-time buyers now benefit from a permanent stamp duty exemption up to £425,000, which could mean a maximum saving of £6,250. For all other buyers, this exemption caps at £2,500.
How stamp duty is paid
An important point to know is you’ll need to submit a stamp duty return, even if you’re not paying any SDLT. Your solicitor will usually submit your return, although you can do it yourself. You’re responsible for ensuring that stamp duty is paid to HM Revenue & Customs (HMRC) within 14 days of the effective’ transaction date.
Am I eligible for a stamp duty refund?
In some exceptional circumstances, you may be eligible for a stamp duty refund, for example if you’ve overpaid or qualify for a refund in retrospect. If you’re buying an additional property, you’ll pay an additional rate of stamp duty on a second home. However, if you sell what was your main home within three years of purchasing your second, you can apply for a refund on the surcharge of second home SDLT you’ve paid. If it took longer than three years to sell your previous home, then you could still apply for refund if there are exceptional circumstances which stopped you from selling it. Visit the gov.uk to find more about how to claim back stamp duty.
We recommend you speak with a qualified financial adviser or solicitor if you need more details on exemptions, refunds, or potential reliefs (like in cases of divorce or separation), and for help navigating this tax when buying a home to make the process as smooth as possible.
How long does it take to get a stamp duty refund?
The stamp duty refund is usually processed within 15 days after you submit your online form to HMRC.
Is there a deadline to claim a stamp duty refund?
Yes, the claim window is limited to 12 months from either the sale of the previous main residence or the initial purchase date of the second property. In certain circumstances, it might be extended to three years. Make sure to apply within this period to avoid missing out.
Can I claim back stamp duty on a second home?
If you’ve purchased a second home and paid the additional stamp duty surcharge, you can apply for a refund of the higher rates of SDLT if you’ve sold what was previously your main home.
How to avoid paying stamp duty on a second home
As stamp duty on a second home is unavoidable, you may be able to reduce the amount you owe legally. Here are some of the options available to you:
- Buy a second property valued at below £40,000. All properties purchased below £40,000 are exempt from SDLT.
- Buy a movable property: mobile homes, houseboats and caravans are all exempt from stamp duty charges.
- Build a second home: If building a home, stamp duty is only payable on the cost of the land and not the finished property.
- Negotiate the purchase price: the lower the value, the less SDLT you’ll pay. So always consider this when negotiating the purchase price.
Taking control and understanding stamp duty payments
Stamp duty can be a considerable expense but knowing when and how to claim a refund can make a significant difference in your home-buying costs. If you’re exploring mortgage options or need further advice on property purchases, explore our mortgage products to find flexible solutions tailored to your needs.
This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at unbiased.co.uk.