With house prices recovering and mortgage rates slipping back, the housing market is on the up again.
Even though the difficult affordability situation we've seen over the last few years is easing slightly, it is still crucial to know exactly how much you may need to pay in additional fees and taxes. One of the most costly of these extras is stamp duty.
The property tax - which some describe as the “worst tax in Britain” - has changed several times since 2020. During the pandemic, it was temporarily suspended by then-Chancellor Rishi Sunak in a bid to get the housing market moving. This stamp duty holiday sent house prices soaring as buyers rushed to take advantage of it.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Then, in the disastrous mini-Budget, Kwasi Kwarteng announced a permanent cut to the tax which was intended to help first-time buyers get onto the property ladder. His successor as Chancellor, Jeremy Hunt, watered down the measure in the follow up fiscal event that came after Rishi Sunak was made Prime Minister.
This temporary tax cut is due to expire on 31 March 2025.
So, what can you expect to pay in stamp duty? We’ve got all the latest information, as well as a stamp duty calculator.
Stamp duty: how much will you pay?
Home buyers in England will see the amount of tax they pay vary depending on the price bracket or brackets their property falls into. First-time buyers get a discounted rate, while buyers in Scotland and Wales face a different form of tax (more on this below). Non-residential property or land is also subject to different taxes and rates.
Here’s what you will pay in stamp duty, depending on the value of the home you’re buying:
| Property cost | Stamp duty rate per band | Max. you could pay per band |
|---|---|---|
| Up to £250,000 | 0% | £0 |
| £250,001 to £925,000 | 5% | £33,750 |
| £925,001 to £1.5m | 10% | £57,500 |
| £1.5m+ | 12% | £60,000* |
*assuming property price of £2m
Before these temporary rates came in, you would have to pay stamp duty on anything over £125,000. The Treasury says the doubling of this threshold means buyers are saving up to £2,500 per transaction.
Meanwhile, first-time buyers are currently exempt from paying the tax up to an amount of £425,000 (it used to be £300,000) and can access relief of up to £8,750 on homes costing up to £625,000. The government says this regime means 78% of first-timers are paying nothing in stamp duty, while 46% of all buyers are also not having to pay the tax.
There are higher stamp duty rates for additional properties; you will usually have to pay 5% on top of the stamp duty rates if purchasing a new residential property means you'll own more than one.
Is stamp duty changing?
The current stamp duty regime is expiring at the end of March 2025.
From April 1, the stamp duty rates will be as follows:
| Property cost | Stamp duty rate per band |
|---|---|
| Up to £125,000 | Zero |
| The portion from £125,001 to £250,000 | 2% |
| The portion from £250,001 to £925,000 | 5% |
| The portion from £925,001 to £1.5 million | 10% |
| The portion above £1.5 million | 12% |
First-time buyers currently don't have to pay any stamp duty on property worth up to £425,000. A rate of 5% applies on any portion from £425,001 to £625,000.
You can't claim first-time buyer stamp duty relief if the property price is more than £625,000.
From 1 April, the relief will revert to no stamp duty on the first £300,000, then a 5% rate on the portion from £300,001 to £500,000.
If the property price is more than £500,000, no relief will be available for first-time buyers from April.
How much property tax could you pay in Scotland and Wales?
As we’ve already mentioned, Scotland and Wales have different property tax regimes. The devolved government in Edinburgh replaced stamp duty with the Land and Buildings Transaction Tax (LBTT) in 2015, while the Welsh government replaced it with the Land Transaction Tax (LTT) in 2018.
Land and Buildings Transaction Tax in Scotland
The rates of LBTT are set by the Scottish government and are locked in until 2026. Here’s what the bands look like:
| Property cost | LBTT rate per band | Max. you could pay per band |
| Up to £145,000 | 0% | £0 |
| £145,001 to £250,000 | 2% | £2,100 |
| £250,001 to £325,000 | 5% | £3,750 |
| £325,001 to £750,000 | 10% | £42,500 |
| Over £750,000 | 12% | £30,000* |
*Assuming property price of £1m
First-time buyers are exempt from paying anything up to a value of £175,000. While all of these bands may sound low, property north of the border tends to be significantly cheaper than what you could pay in England and Wales.
Land Transaction Tax in Wales
The devolved administration in Cardiff does not offer special rates for first-time buyers. Here’s what you will pay in Wales:
| Property cost | LTT rate per band | Max. you could pay per band |
| Up to £225,000 | 0% | £0 |
| £225,001 to £400,000 | 6% | £10,500 |
| £400,001 to £750,000 | 7.5% | £26,250 |
| £750,001 to £1.5m | 10% | £75,000 |
| Over £1.5m | 12% | £60,000* |
*Assuming property price of £2m
-
What investors can expect from stocks and economies in 2025There are reasons for investors to be hopeful about 2025, with slowing interest rates and moderating oil prices. But trouble may be brewing in bond markets
-
Is Xi Jinping ready for Donald Trump's tariffs on China?The ascent of Donald Trump will bring new challenges for Xi Jinping
