Everything you need to know about stamp duty and other fees

Stamp duty is part and parcel of buying a home. At Armaani Estates, we want to ensure every client understands how this tax works and how to prepare for it when planning a purchase.

Understanding the costs involved—including stamp duty—helps you make informed financial decisions and avoid unexpected expenses down the line.

What Is Stamp Duty?

Stamp duty is a property transaction tax applied when purchasing real estate in England and Northern Ireland. It has existed since 1694 and remains a significant consideration when budgeting for your new home.

In Scotland, it's referred to as Land and Buildings Transaction Tax (LBTT), and in Wales, it's known as Land Transaction Tax (LTT).

How Much Is Stamp Duty?

Stamp duty is calculated in bands. Instead of paying one flat rate, you pay a percentage on portions of the property’s value.

For example, if you purchase a property for £600,000:
– 0% on the first £500,000
– 5% on the remaining £100,000
Total stamp duty = £5,000

If you’re buying a second property worth more than £40,000, you’ll pay an extra 3% on top of the standard rates.

Current rates in England and Northern Ireland:
Main residence:
– £0 to £500,000: 0%
– £500,001 to £925,000: 5%
– £925,001 to £1.5 million: 10%
– Over £1.5 million: 12%

Additional properties:
– £0 to £500,000: 3%
– £500,001 to £925,000: 8%
– £925,001 to £1.5 million: 13%
– Over £1.5 million: 15%

When Do You Pay Stamp Duty?

You must pay stamp duty within 14 days of completion. Your solicitor usually handles this for you. If it’s late, HMRC can charge penalties and interest.

Even if no stamp duty is owed, you still need to submit a return to HMRC.

Who Pays Stamp Duty?

Most buyers have to pay stamp duty, but there are exemptions:
– First-time buyers purchasing for £500,000 or less (England and NI)
– Buyers of properties below the tax thresholds

You can include the cost in your mortgage, but this increases long-term interest. It’s best to plan ahead and budget for it separately.

Can You Reclaim Stamp Duty?

Yes, in certain situations.

If you buy a new home before selling your old one, you’ll pay the 3% surcharge. But if you sell your previous home within 36 months, you can claim a refund.

If your sale takes longer than 36 months due to reasons outside your control, you may still be eligible. You’ll need to write to HMRC and request a refund.

When Is Stamp Duty Not Payable?

You don’t pay stamp duty if:
– You're a first-time buyer (within limits)
– The property is below the threshold
– No payment is made for the property (e.g. as a gift or inheritance)
– Property is transferred due to divorce or legal separation

Stamp Duty on Shared Ownership

You can either:
– Pay a one-time stamp duty based on the full market value of the property
– Or pay in stages as you increase your ownership (you only pay again if you go above 80%)

Speak with your solicitor or an Armaani Estates adviser to decide what works best for you.

Stamp Duty in Scotland

Known as LBTT, with an extra 4% on second homes.
Main residence rates:
– Up to £145,000: 0%
– £145,001 to £250,000: 0%
– £250,001 to £325,000: 5%
– £325,001 to £750,000: 10%
– Over £750,000: 12%

Second properties:
– Add 4% to the above bands

Stamp Duty in Wales

Known as LTT. Must be paid within 30 days.
Main residence rates:
– Up to £180,000: 0%
– £180,001 to £250,000: 0%
– £250,001 to £400,000: 5%
– £400,001 to £750,000: 7.5%
– £750,001 to £1.5 million: 10%
– Over £1.5 million: 12%

Additional properties:
– Add 3% to £180,000 or less
– Add 6.5% to £180,001 to £250,000
– Add 8% to £250,001 to £400,000
– Add 10.5% to £400,001 to £750,000
– Add 13% to £750,001 to £1.5 million
– Add 15% to over £1.5 million

Final Thoughts from Armaani Estates

Stamp duty can significantly affect your overall costs, so it’s important to be fully prepared. Whether you're buying your first home or building your investment portfolio, Armaani Estates is here to help guide you every step of the way.

Have more questions? Get in touch with our team today.