The Same House, Three Very Different Bills
Stamp Duty Land Tax is charged on property purchases in England and Northern Ireland, and the amount depends far less on the house than on who is buying it. Take a £500,000 purchase and the tax ranges from £3,750 to £27,500 depending on the buyer's circumstances alone.
| Buyer | SDLT on £500,000 | Why |
|---|---|---|
| First-time buyer | £3,750 | Nothing to £425,000, then 5% on the remaining £75,000. |
| Home mover | £12,500 | Nothing to £250,000, then 5% on the next £250,000. |
| Additional property | £27,500 | Standard bands with a 3% surcharge applied to every band, including the nil-rate one. |
How the Bands Work
SDLT is a slice tax, not a slab tax. Each rate applies only to the portion of the price falling inside its band, so crossing a threshold never taxes the whole purchase at the higher rate.
| Portion of price | Standard rate | With 3% surcharge |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1,500,000 | 10% | 13% |
| Above £1,500,000 | 12% | 15% |
The surcharge is the detail people miss: it applies to the nil-rate band too. A £200,000 buy-to-let attracts £6,000 of SDLT where the same purchase as a main home attracts nothing at all.
First-Time Buyer Relief and Its Cliff Edge
First-time buyers pay nothing up to £425,000 and 5% on the portion between £425,000 and £625,000. Above £625,000 the relief does not taper, it disappears completely, and the standard bands apply to the whole price.
That produces one of the sharpest cliff edges in British taxation:
- Buying at £625,000: relief applies. SDLT is £10,000.
- Buying at £625,001: relief is lost. SDLT is £18,750.
One extra pound on the price costs £8,750 in tax. If you are negotiating anywhere near that figure, the number to argue over is not the asking price but whether the agreed price starts with a 6 and ends at 625,000 exactly. The same logic applies less dramatically at every band boundary, which is why offers cluster just underneath round thresholds.
What Counts as an Additional Property
The 3% surcharge applies if you will own more than one residential property at the end of the day of purchase. That catches more people than expected: buying before selling your existing home triggers it, even when the second purchase is plainly your new main residence. You can reclaim the surcharge if you sell the previous main home within three years, but you have to pay it first and claim it back afterwards, which is a cash-flow problem rather than a tax one.
It also applies to a holiday home, a buy-to-let, and a property bought to house a family member. Inherited shares in a property can count towards the test depending on the size of the share.
Practicalities and Limits
SDLT is due within 14 days of completion, and in practice your conveyancer files the return and pays it out of the completion funds rather than leaving it to you. It is payable in cash and cannot be added to the mortgage, which is why it belongs in the deposit calculation rather than the monthly one.
Scotland and Wales are not covered by this calculator. Scotland charges Land and Buildings Transaction Tax and Wales charges Land Transaction Tax, both with their own bands and thresholds that differ materially from the figures above.
Rates and thresholds change at Budgets, sometimes with immediate effect. This is general information rather than tax or legal advice; a conveyancer or HMRC's own calculator is the right source before you commit to a price.