How Stamp Duty Works

At Picnic, we believe mortgages—and everything that comes with them—should feel simple and stress-free. So, whether you’re a home mover, first-time buyer, landlord or company buyer, here’s a clear, easy-to-understand guide to what stamp duty you’ll actually pay and when.

What Is Stamp Duty?

Stamp Duty Land Tax (SDLT) is a one-time tax placed on the purchase of land or property in England and Northern Ireland. The amount you pay depends on the property's purchase price, type, and your status as a buyer. 

Different rules apply in Scotland (known as Land and Buildings Transaction Tax) and Wales (Land Transaction Tax). 

How Is Stamp Duty Calculated?

Stamp duty is banded, which means you pay different rates for each threshold, rather than one rate based on the full property purchase price. As of April 1, 2025, the SDLT rates applied for main residential properties are:

So, for example, if the property you’re buying is valued at £300,000, this is how much stamp duty you’ll need to pay:

• 0% on the first £125,000 = £0

• 2% on £125,001 to £250,000 = £2,500

• 5% on £250,001 to £300,000 = £2,500

• Total SDLT = £5,000.

How Does Stamp Duty Work for First-Time Buyers?

If you or anyone you’re buying with is a first-time buyer, you’ll benefit from additional SDLT relief on homes up to a value of £500,000. This is how it works:

• 0% SDLT on the first £300,000

• 5% SDLT on the value between £300,001 to £500,000. 

Using the above example, as a first-time buyer, you wouldn’t have any stamp duty to pay as the value of the home is right on the 0% threshold (£300,000). But, if you were buying a property, say, for £350,000, you’d pay 5% SDLT on the amount above £300,000, which would be £2,500 (£50,000 x 5% = £2,500). 

If the home you're buying exceeds £500,000, the first-time buyer relief doesn’t apply at all, and you’ll pay the standard residential rates (outlined above).

What About Additional Homes?

For additional properties (such as second homes or buy-to-lets), an extra 5% surcharge applies on top of standard rates:

Again, using the original example property value of £300,000, but this time let’s assume you’re a landlord buying a rental property, this is the stamp duty you’d need to pay: 

• 5% on the first £125,000 = £6,250

• 7% on £125,001 to £250,000 = £8,750

• 10% on £250,001 to £300,000 = £5,000

• Total SDLT = £20,000.

A refund of the additional 5% surcharge may be available if the property you’re buying is to replace your main residence and you sell within 36 months.

How Does Stamp Duty Work for Companies?

Companies buying residential property are generally subject to the same standard rates plus a 5% surcharge. However, purchases over £500,000 may incur a flat 17% rate if the property isn't used for a qualifying business purpose. A further 2% surcharge applies ON TOP of the standard rates, plus the 5% higher rate surcharge for non-UK resident companies. 

Certain reliefs may apply for property developers, rental businesses or for a farmhouse.

When Do You Pay Stamp Duty?

Any stamp duty owed when you buy a property must be paid within 14 days of completion. Your solicitor will normally handle the payment on your behalf, but legal responsibility to ensure this happens (and on time) lies with the property owner. 

What Are the Stamp Duty Exemptions?

You may be exempt from SDLT in certain situations, such as:

• No money actually changed hands when transferring property ownership

• Properties valued at less than £40,000

• Property transfers due to divorce or dissolution

• Property transfers by inheritance

• You used alternative financial arrangements to buy the property (for example, to comply with Sharia Law)

Always check eligibility with HMRC or a legal adviser before assuming exemption.

Can You Add Stamp Duty to Your Mortgage?

Some lenders may allow you to add SDLT to your mortgage, but it's not typically recommended as it increases your loan amount and the interest you'll pay over time. Adding SDLT to your mortgage could also impact your loan-to-value (LTV) ratio, potentially affecting your interest rate or eligibility, so it’s better to pay the tax upfront if you can.