What Is Stamp Duty and When Do You Pay It?

Stamp Duty surprises more first-time buyers than almost any other property cost. You’ve saved your deposit, secured your mortgage, and then discover there’s another four-figure bill due at completion. Understanding the current rules — and the first-time buyer relief that significantly reduces or eliminates the bill for many purchases — is essential before you budget for any property purchase.

How SDLT is Calculated: The Banded System

SDLT works like income tax bands — you pay each rate on the portion of the price in that band only. Standard rates for 2026/27:

• £0-£125,000: 0%
• £125,001-£250,000: 2%
• £250,001-£925,000: 5%
• £925,001-£1,500,000: 10%
• Above £1,500,000: 12%

Example: standard buyer purchasing £350,000. SDLT = 0% on £125,000 (£0) + 2% on £125,000 (£2,500) + 5% on £100,000 (£5,000) = £7,500 total. Not 5% on the full £350,000.

First-Time Buyer Relief in 2026/27

First-time buyers pay reduced rates, making most modest purchases significantly cheaper or free of SDLT:

• 0% on the first £300,000 (for properties costing up to £500,000)
• 5% on the portion from £300,001 to £500,000
• No first-time buyer relief applies on properties over £500,000 — standard rates apply on the full price

Example: first-time buyer purchasing £280,000. SDLT = £0 (all below £300,000 threshold). First-time buyer purchasing £380,000: 0% on £300,000 (£0) + 5% on £80,000 (£4,000) = £4,000 total.

To qualify: every purchaser named on the title must be a genuine first-time buyer — meaning no one on the purchase has ever owned a residential property anywhere in the world previously. If one buyer in a joint purchase has owned before, first-time buyer relief doesn’t apply to either.

The Second Home and Buy-to-Let Surcharge

Purchases subject to the higher residential rates usually pay an extra 5 percentage points on each standard SDLT band. On a £250,000 purchase to which those rates apply, with no other surcharge or relief: 5% of £125,000 (£6,250) plus 7% of £125,000 (£8,750) gives £15,000. A standard-rate purchase at the same price incurs £2,500. Buying a rental property does not by itself settle eligibility; ownership and replacement-of-main-residence rules matter. Check HMRC’s current guidance.

For the financial implications of the surcharge for landlords, our guide on buy-to-let in 2026 covers how it affects investment returns.

When and How SDLT is Paid

SDLT must be paid and a return filed with HMRC within 14 days of the completion date. Your conveyancing solicitor handles this as part of the process — they calculate the amount, include it in the completion funds they request from you, pay HMRC, and file the return. Failure to pay within 14 days triggers automatic penalties.

SDLT is generally not addable to your mortgage — it must be paid in cash at completion. Budget for it separately from your deposit.

Scotland and Wales

Scotland uses Land and Buildings Transaction Tax (LBTT) with different thresholds: 0% on the first £145,000 (£175,000 for first-time buyers). Wales uses Land Transaction Tax (LTT): 0% on the first £225,000. SDLT and its rules do not apply in Scotland or Wales.

Frequently Asked Questions

Can I get a refund if I buy a new home while still owning my old one?

You may qualify for a refund of the higher-rate element if you sell your previous main residence within three years and meet HMRC’s conditions and claim deadline. Refunds are not automatic. Check the replacement-of-main-residence rules with your conveyancer.

Does SDLT apply on the purchase of a leasehold?

Yes — SDLT applies on leasehold purchases. For short leases with a net present value above certain thresholds, SDLT also applies on the value of the lease itself, in addition to any premium paid.

Calculate your exact SDLT liability using HMRC’s official SDLT calculator.