When you buy a property or land, you usually pay tax on it. This is known as stamp duty in England and Northern Ireland, land and buildings transaction tax in Scotland and land transaction tax in Wales.
Stamp duty is calculated on a tiered basis which we will look at below. This means that instead of paying one rate or percentage on the whole amount, you will pay one rate on a certain portion of the property and another rate on another.
£16 Billon of stamp duty was collected in 2022 in England from homebuyers (according to Coventry Building Society). This was a 23% increase from the previous year.
In England and Northern Ireland, no stamp duty is due on the first £250,000 of a property (provided it's your main residence, it excludes additional properties) – though that threshold is £425,000 if you're a first-time buyer. The £425,000 first-time buyer stamp duty threshold does not apply if the property you are buying costs more than £625,000 – if it does, you'll pay the normal rate of stamp duty.
If you're buying in England or Northern Ireland, you have 14 days from the date of completion (when you get the keys) to pay stamp duty. In Scotland and Wales, you have 30 days.
Usually, your solicitor sorts this out and tends to pay the bill straightaway – in fact, most tend to want their cash before completing the property purchase for you, just in case you then can't or don't pay them.
However, it's legally your responsibility to ensure your stamp duty/transaction tax is paid. If you are doing this yourself, click the questions to see the process.
You can add stamp duty to your mortgage loan but it’s not always the best option.
By adding the stamp duty to your mortgage means a bigger mortgage debt, meaning more interest payable over the term and higher payments.
Secondly, this could affect your loan to value (LTV) the measure of how much you are borrowing vs the property’s price, meaning you may be able to get a better product/rate if you were to pay it separately.
