A tax on buying property, paid by the buyer
Stamp duty is charged when you buy property or land above a certain price. The buyer pays it, it falls due shortly after completion, and in practice your solicitor files the return and pays it out of the completion money.
The name is a fossil. The duty was originally a charge for physically stamping a legal document to make it enforceable, and nothing has been stamped in a very long time. Scotland and Wales have since replaced it with their own taxes and dropped the phrase altogether, which is a large part of why the terminology is confusing.
It is charged in slices, and almost everybody thinks it is a cliff
This is the belief worth correcting, because it changes how people negotiate. The fear is that offering a pound over a threshold will retax the entire purchase price at the higher rate and cost thousands.
It will not. The price is cut into slices and each slice is taxed at its own rate, exactly the way income tax works.
The belief has a real origin. The system before 2014 genuinely was a cliff: crossing a threshold did apply the higher rate to the whole price, which produced absurd dead zones just above each boundary where no sensible person would ever agree a price. That was the reason it was changed, and the folk memory has outlived it by more than a decade.
It is cash, and it cannot go on the mortgage
A mortgage is secured against the property and sized against its value, so the tax is not part of what you are borrowing. It has to be available as cash on completion, alongside the deposit, the legal fees and the survey.
Budgeting as though it can be financed is one of the more painful ways to discover a shortfall late, because it surfaces at the point when everything else is already committed.
Three taxes, not one, and they are genuinely different
England and Northern Ireland charge Stamp Duty Land Tax. Scotland charges Land and Buildings Transaction Tax. Wales charges Land Transaction Tax.
Different names, different bands, different thresholds and different rules about who qualifies for what. A figure quoted for one is not a guide to another, and the stamp duty calculator handles them separately for exactly that reason, including the surcharges and the three different versions of first-time buyer relief.
Elsewhere, and who pays changes
- Australia. Stamp duty under that name, charged by each state and territory rather than nationally, with its own concessions. The buyer pays.
- Canada. Land transfer tax, set provincially, and Toronto adds a municipal one on top of the Ontario charge. The buyer pays.
- United States. Transfer taxes and recording fees, set by state and county, and here the convention flips: in much of the country the seller customarily pays. Rates are generally far lower than British stamp duty.
So somebody moving between markets should check who is liable before assuming, because the answer is not the same and the amounts are not comparable.
What to have ready before you offer
Work the tax out on the price you are actually considering rather than on the asking price, and do it before offering rather than after. The stamp duty calculator covers all three UK taxes and the surcharges. Alongside it, the mortgage repayment calculator gives the monthly figure and the cost of moving covers everything else that has to be cash on the day, which is usually more than people expect.
Common questions
Who pays stamp duty, the buyer or the seller?
In the United Kingdom, the buyer, always. The seller has no liability for it at all. This is worth knowing if you are reading American advice, because in much of the United States the equivalent transfer tax is customarily paid by the seller, and the convention varies by state and even by county. Australia charges the buyer as we do, and Canadian land transfer tax is a buyer cost too.
If I go a pound over a threshold, do I pay the higher rate on everything?
No. The tax works in slices, exactly like income tax: the first portion of the price is taxed at its rate, the next portion at the next rate, and so on. It is the single most common misunderstanding about it. So going a pound over a boundary costs you the higher rate on that one pound, which is pennies, rather than on the whole purchase. The old system before 2014 genuinely did work as a cliff, which is probably why the belief persists.
Can I add stamp duty to my mortgage?
Not directly, and budgeting as though you can is a real problem. A mortgage is secured against the property and lenders size it against the property value, so the tax is not part of what is being borrowed. You need it as cash on completion, alongside the deposit and the legal fees. Some buyers borrow more elsewhere or take a smaller deposit to free up the money, but that is a separate decision with its own cost rather than the tax being financed.
When is it actually due?
Shortly after completion rather than on the day of exchange, and there is a filing deadline as well as a payment one. In practice your solicitor or conveyancer files the return and pays it out of the completion funds, so most buyers never handle it directly. What matters to you is that the money has to be with them beforehand, and that the liability is yours rather than theirs if it goes wrong.
Why is it called stamp duty?
Because documents used to be physically stamped. The duty was a charge for impressing a stamp on a legal document to make it enforceable, dating back to the late seventeenth century, and the name outlived the practice by a very long way. Nothing has been stamped for decades and the Scottish and Welsh replacements dropped the word entirely, which is part of why the terminology is now so confusing.
Is it the same everywhere in the UK?
No, and they are separate taxes rather than regional rates of one tax. England and Northern Ireland charge Stamp Duty Land Tax, Scotland charges Land and Buildings Transaction Tax, and Wales charges Land Transaction Tax. They have different names, different bands, different thresholds and different rules on reliefs, which is why a calculator that asks where the property is before anything else is doing the right thing.