What is Stamp Duty?
Among all the other terms you may hear when you are involved in a property transaction, stamp duty is perhaps one of the most common. It is in the news frequently and it can often be quite confusing knowing whether you have to pay it and if you do, how much.
At Gaffsy, we understand this confusion. As one of the leading cash house buyers in the UK, it is a topic we are asked about countless times during the day. To ease the confusion and to lay out exactly what stamp duty is, we thought a quick guide would help.
So, what is stamp duty?
In simple terms, stamp duty or SDLT is a tax that is paid when you are purchasing a property. The amount you pay depends on the value of the property and where you are on the property ladder. For example, first-time buyers have different rules around stamp duty to second steppers. Likewise, stamp duty for inherited property is also a little different.
What is the stamp duty threshold?
Recent announcements by the Government changed the threshold on stamp duty. It is hoped that this will help the property market and in turn the economy. We have gone into great depth about the stamp duty changes in another feature, but below, we will show you how the rates are currently looking.
| Property Value | Stamp Duty (SDLT) rate |
| Up to £250,000 | Zero |
| £250,001-£925,000 | 5% |
| £925,001-£1.5m | 10% |
| The remaining value after £1.5m | 12% |
The above rates are for residential property. Should you be investing in commercial buildings instead, the rates are a little different:
| Property Value | Stamp Duty rate |
| Up to £150,000 | Zero |
| £150,001-£250,000 | 2% |
| The remaining value after £250,000 | 5% |
What is stamp duty for first-time buyers?
It is important to note that, currently, first-time buyers get reduced stamp duty on properties up to £625,000, with no stamp duty on the first £425,000 and a 5% charge on the remainder. However, starting April 1, 2025, this threshold will lower to £500,000. First-time buyers will then pay no stamp duty on the first £300,000, with 5% applied to any amount between £300,000 and £500,000. For a property at the current £625,000 limit, this change means an extra £11,250 in stamp duty.
| Tax difference for first-time buyers: | |||
| First-time buyer changes | |||
| Cost of home | Now | Apr-25 | Difference |
| £400,000 | £0 | £5,000 | £5,000 |
| £500,000 | £3,750 | £10,000 | £6,250 |
| £625,000 | £10,000 | £21,250 | £11,250 |
| First time buyer rate changes: | |||
| First time buyers – buying under £625,000 | First time buyers – buying under £500,000 | ||
| Threshold | Rate | Threshold | Rate |
| £0 to £425,000 | 0% | £0 to £300,000 | 0% |
| £425,001 to £625,000 | 5% | £300,001 to £500,000 | 5% |
What is the Stamp Duty Charge for a Second Home?
If you’re looking to buy an additional property, the stamp duty rates have increased as of October 31, 2024. Second-home buyers pay higher rates compared to primary residence buyers, making second-home purchases significantly more expensive.
| STAMP DUTY RATES | |||
| Purchase price | Main residence rate | 2nd or additional property – current rate | 2nd or additional property – rate from 31 Oct |
| Up to £250,000 | 0% | 3% | 5% |
| (or £425,000 for first-time buyers) | |||
| £250,001 – £925,000 | 5% | 8% | 10% |
| £925,001 – £1,500,000 | 10% | 13% | 15% |
| £1,500,001+ | 12% | 15% | 17% |
If you plan to sell your first property within 36 months of purchasing a second home, you may be eligible to reclaim the extra stamp duty paid. However, if the sale takes longer than 36 months, you’ll need to apply directly to HMRC for a refund and provide a reason for the delay.
Home movers will also see increases. While they currently pay no stamp duty on the first £250,000 and 5% on the next £675,000, from April the exemption will drop to the first £125,000, with a new 2% rate from £125,000 to £250,000, adding up to £2,500 more to their bill.
| Home mover changes: | |||
| Stamp duty rates – now | Stamp duty rates – from April 2025 | ||
| Threshold | Rate | Threshold | Rate |
| £0 to £250,000 | 0% | £0 to £125,000 | 0% |
| £250,001 to £925,000 | 5% | £125,001 to £250,000 | 2% |
| £925,001 to £1.5m | 10% | £250,001 to £925,000 | 5% |
| £1.5m+ | 12% | £925,001 to £1.5m | 10% |
| £1.5m+ | 12% | ||
What is the stamp duty charge for a second home?
If you are in a position where you are looking to buy an additional property, the rates are again a little different. In most cases, the amount of stamp duty you pay on a second home will be 3% on top of the typical rate for the property value.
However, if you are looking to sell your other property, you are able to claim back the additional 3% as long as it sells within 36 months of you buying the second home. If the house sells after this time period, you would be required to contact HMRC to apply for the refund, explaining why the sale took so much longer.
What is non UK resident stamp duty?
In some cases, people who reside abroad may wish to buy property in the UK. You could still be a British citizen but be working in a foreign country perhaps, and would like a home for when you are in the country.
If you spend less than 6 months in the UK, you will not be classed as a UK resident in stamp duty terms. This means that you will pay a 2% surcharge on the property you are buying. However, there are certain exemptions and it is advisable to check the government guidelines on whether you qualify for those.
If you do not, not only will the surcharge be applied but the rates will be calculated depending on your status as a buyer – for example, first-time buyers or someone buying an additional property.
How long do I have to pay stamp duty?
You must pay your stamp duty within 14 days, a decrease from the 30 days previously offered. If, for any reason, you cannot pay within that time frame, you must speak to HMRC as you could incur penalties that make the bill a lot more expensive.
Can you not pay stamp duty?
In some cases, stamp duty isn’t payable at all. For example, if you gift your house to someone and there is no mortgage on it, they will not pay any SDLT on the value of the property. Should there be a mortgage left to pay, the stamp duty is calculated based on the value of the outstanding mortgage.
Other scenarios where stamp duty is not paid include when a property is left as part of a will and when property is transferred as part of a court order relating to divorce or separation.
At Gaffsy, we buy property fast, meaning you never have to worry about a chain failing to link. Our business model means we buy any home at all, anywhere in the country. If you are thinking about selling and prefer a fast sale over the typical 6 months or longer you get with traditional estate agents, speak to us. We can offer you a free cash offer and have funds with you fast. That way you can move on with your property plans quickly.
