Thinking about buying a house? One of the first costs that pops up is stamp duty. It’s a tax you pay to the government when you transfer ownership of a property. If you ignore it, you could face penalties, so it’s worth getting a handle on the rules before you sign on the dotted line.
Stamp duty isn’t a flat fee – it changes depending on how much you’re spending, whether you’re a first‑time buyer, and where the property is. In England and Northern Ireland, the rates differ from those in Scotland and Wales, which have their own equivalents (Land and Buildings Transaction Tax and Land Transaction Tax). This guide focuses on the standard English system but the principles apply elsewhere.
The calculation works in bands. For most residential purchases, you pay 0% on the first £250,000, 5% on the portion between £250,001 and £925,000, 10% on the slice from £925,001 to £1.5 million, and 12% on anything above £1.5 million. If you’re a first‑time buyer, you get a relief that removes the 5% charge on the first £300,000 of a property up to £500,000.
Let’s do a quick example. Say you’re buying a house for £400,000 and you’re a first‑time buyer. The first £300,000 is tax‑free. The remaining £100,000 falls into the 5% band, so you’d owe £5,000. If you weren’t a first‑timer, you’d pay 0% on the first £250,000 and 5% on the remaining £150,000, which equals £7,500. That’s a £2,500 difference, simply because it’s your first home.
For higher‑priced homes, the bands stack. If you buy a £1 million property, you’d pay 0% on the first £250,000, 5% on the next £675,000 (£33,750), and 10% on the final £75,000 (£7,500). Total stamp duty comes to £41,250.
One of the easiest ways to lower the bill is to buy as a first‑time buyer if you qualify. Even if you’ve owned a home before, you can still benefit from certain reliefs if you move to a smaller property and sell the larger one within a set time frame.
Another trick is to consider shared ownership. When you buy a share of a property (usually 25% to 75%), you only pay stamp duty on the portion you actually purchase. The same principle applies to buying a leasehold property: you only pay on the purchase price, not the lease premium.Buying through a limited company can also shave off some tax, but it brings extra paperwork and possible corporation tax. It’s worth chatting with a mortgage adviser or tax specialist before taking this route.
Finally, keep an eye on government announcements. Every few years the thresholds shift, and temporary reliefs sometimes appear to encourage market activity. A quick search for “current stamp duty rates” before you make an offer can save you hundreds or even thousands of pounds.
Bottom line: stamp duty is a predictable part of the house‑buying process, but it doesn’t have to be a surprise. Knowing the bands, checking your eligibility for reliefs, and exploring alternative purchase methods can keep the cost down. Use an online stamp duty calculator to get an instant estimate, then factor that number into your budget before you start house hunting.
Angela Rayner quit as Deputy Prime Minister after an independent ethics investigation found she breached the ministerial code over a stamp duty underpayment. Keir Starmer accepted her resignation and reshuffled his cabinet. The case is the first major test of Labour’s tougher ethics system and disrupts Starmer’s plan for a political reset, removing a key figure from the top of government.