Understanding Stamp Duty

Industry News

Understanding Stamp Duty

27 June 2022

If you’re a first-time buyer, it’s likely you’ve completed a wide range of research to understand more about the process. Stamp Duty is one aspect of purchasing a home you may have come across but may not fully understand. If this is an area of buying a new build home that you’re unsure of, read below to learn more about this form of tax, what it is and how it affects the purchase of your home.

What is Stamp Duty?

Stamp Duty is a home purchasing related tax that you might have to pay if you buy either a residential property or a piece of land in England or Northern Ireland. Although it is applied during the process of buying a home, you will only have to pay this tax on properties that cost more than £125,000. The only time this will not be the case is if you are eligible for first-time buyer’s relief.

If you are a first-time buyer, you will not be required to pay this fee if your home is priced at £300,000 or below and a discounted rate will be applied on any properties that cost up to £500,000.

For second time buyers, a 3% tax will be applied on properties that cost more than £40,000. Stamp Duty applies to whether you are buying a property outright or with a mortgage, so is something that should be budgeted for when moving into your first or second property.

How much do I have to pay?

Stamp Duty comes in rate bands and the value you are required to pay will be determined by the type of buyer you are (first or second time) and the value of the home you intend to purchase. For example, if you are buying a house for £450,000, the breakdown would be as follows:

0% to pay on the first £125,000 = £0

2% to pay on values between £125,001 and £250,000 = £2,500

5% to pay on values between £250,001 and £450,000 = £10,000

Total Stamp Duty to pay: £12,500


Stamp Duty Rates

Minimum property page price Maximum property purchase price Stamp Duty rate
£0 £125,000 0%
£125,001 £250,000 2%
£250,001 £925,000 5%
£925,001 £1.5 million 10%
Over £1.5 million   12%

For first-time buyers, you won’t have to pay for this tax on properties worth up to £300,000. For properties that cost up to £500,000, there will be no Stamp Duty tax on the first £300,000 and then at the relevant rate of 5% on the remaining amount, up to £200,000.

For any property over £500,000, first time buyers will need to pay the standard rates as shown in the table above, as you won’t qualify for first-time buyer’s relief.

If you want to learn more about Stamp Duty or need help on budgeting for your new build home, get in contact with Fletchers Homes today at 01743 267020 or email us at [email protected].


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