Stamp Duty has recently hit the headlines, with Deputy Prime Minister Angela Rayner underpaying the tax on her recent property purchase, highlighting just how important it is to get the correct advice when buying property.
Conveyancing solicitor Jackie Murphy at our West Bridgford office breaks down the key facts about Stamp Duty and why understanding the rules can save you from costly mistakes.
What is Stamp Duty?
Stamp Duty or Stamp Duty Land Tax (SDLT) is a tax you pay when buying property or land in England and Northern Ireland. It's paid to HM Revenue & Customs (HMRC) as a lump sum when your purchase is completed.
You'll need to pay Stamp Duty if the property you're buying is above a certain price threshold. The amount of Stamp Duty that you may have to pay depends on several factors (but is not limited to) whether you are:
- a UK resident
- buying as an individual or through a company
- a first-time buyer (you have never owned, or part owned a property anywhere in the world)
- replacing your main residence (selling your current property and completing your new purchase at the same time)
- buying an additional property (like a second home or buy-to-let)
What are the current Stamp Duty thresholds?
| Main Residences | Additional Property | |
| Up to £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,000 – £925,000 | 5% | 10% |
| £925,001 – £1.5 million | 10% | 15% |
| Over £1.5 million | 12% | 17% |
These rates apply from 1st April 2025.
When does the higher rate apply?
You'll usually pay the higher rate if you're buying an extra residential property, like a second home or a buy-to-let, and you're not replacing your main residence.
Example:
Sarah owns a flat and decides to buy a cottage in the countryside. If she hasn't sold her flat by the time she completes the cottage purchase, she'll pay the higher rate. But if she sells the flat within 3 years, she can apply for a refund.
Other scenarios that may trigger the higher rate:
- your spouse or civil partner owns another property, even if you're buying alone
- you own property through a trust
- you're buying through a company
What if you pay the wrong amount?
If you underpay Stamp Duty, whether by mistake or misunderstanding, HMRC can issue penalties:
- careless errors: typically could be between 20–30% of the underpaid tax
- deliberate underpayment: Up to 100% of the underpaid tax
These penalties are in addition to the tax you owe.
It's important to remember that conveyancers aren't tax experts. We rely on the information you provide to submit your SDLT return.
As we have seen with the Deputy Prime Minister Angela Rayner, Stamp Duty can be complex. If you have any doubt about whether the higher rates of Stamp Duty will apply to your transaction or if you do not fully understand the rules, then it is recommended that you obtain specialist tax advice. This will ensure that you pay the correct amount of Stamp Duty prior to completing your purchase.
Useful resources
Further guidance on additional rates of Stamp Duty
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
