Why stamp duty is not a flat rate
The most common misunderstanding about stamp duty is that the rate shown for a property price applies to the entire purchase. It does not. Like income tax, SDLT works in slices: only the portion of the price within each band is taxed at that band's rate. When the price crosses into a higher band, only the amount above the threshold is taxed at the higher rate.
This progressive design means your effective rate (total tax as a percentage of the purchase price) is always lower than the top band you reach. It also means that buying just above a band boundary adds only a small amount of extra tax, not a sudden jump applied to the whole price. Understanding this prevents buyers from artificially capping searches just below band thresholds, which rarely represents a real financial cliff.
Standard residential SDLT bands (England and Northern Ireland, 2025/26)
Each row shows the rate applied only to the portion of the price within that band.
| Portion of purchase price | SDLT rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| Above £1,500,000 | 12% |
Thresholds can change at Budgets. Always verify current rates on GOV.UK or with your conveyancer before completion.
Worked example: buying a £350,000 home (standard buyer)
Step through the calculation band by band.
Step 1: first £125,000 at 0%
0% of £125,000 = £0.
Step 2: next £125,000 (up to £250,000) at 2%
2% of £125,000 = £2,500.
Step 3: remaining £100,000 (from £250,001 to £350,000) at 5%
5% of £100,000 = £5,000.
Step 4: add the slices together
£0 + £2,500 + £5,000 = £7,500 total SDLT. Effective rate = £7,500 / £350,000 = 2.14%.
First-time buyer relief
First-time buyers benefit from a significant reduction in SDLT. The rate on the first £300,000 of the purchase price is 0%, and the portion from £300,001 to £500,000 is charged at 5%. If the property costs more than £500,000, the relief disappears entirely and standard rates apply from the first pound.
Using the same £350,000 example, a first-time buyer pays 0% on the first £300,000 (£0) and 5% on the next £50,000 (£2,500), giving a total of £2,500. This compares with £7,500 for a standard buyer: a saving of £5,000 on a single transaction.
Both buyers in a joint purchase must be first-time buyers to qualify for the relief. If one buyer has previously owned a home anywhere in the world, neither buyer receives the relief, even if the other is a genuine first-time buyer.
First-time buyer vs standard buyer SDLT comparison
How the relief affects the tax bill at different price points.
| Purchase price | Standard buyer SDLT | First-time buyer SDLT | Saving |
|---|---|---|---|
| £200,000 | £1,500 | £0 | £1,500 |
| £300,000 | £5,000 | £0 | £5,000 |
| £400,000 | £10,000 | £5,000 | £5,000 |
| £500,000 | £15,000 | £10,000 | £5,000 |
| £525,000 | £16,250 | £16,250 | £0 (relief lost) |
Above £500,000 the first-time buyer relief is lost entirely and standard rates apply from the first pound.
The additional-property surcharge
If you are buying a second home, a buy-to-let or any additional residential property and you will own more than one property at the end of the transaction, an extra 5% surcharge is added to every SDLT band, including the 0% band. This means even the first pound of the purchase price attracts the 5% surcharge when you already own another home.
Using the £350,000 example again: standard SDLT is £7,500. The surcharge adds 5% of the full £350,000, which is £17,500, giving a total of £25,000. On a £250,000 additional property the surcharge alone adds £12,500 to the purchase cost.
There are two important exceptions. First, if you are replacing your main residence (selling one home and buying another), the surcharge usually does not apply. Second, if you purchase an additional property and then sell your previous main residence within three years, HMRC will refund the surcharge on request. The refund window is three years from the purchase date or three months from the sale of the previous main residence, whichever is later.
Scotland and Wales: equivalent transaction taxes
Each nation sets its own rates, but all three use the same progressive slice method.
| Nation | Tax name | Administered by | Where to find rates |
|---|---|---|---|
| England and Northern Ireland | Stamp Duty Land Tax (SDLT) | HMRC | gov.uk/stamp-duty-land-tax |
| Scotland | Land and Buildings Transaction Tax (LBTT) | Revenue Scotland | revenue.scot/lbtt |
| Wales | Land Transaction Tax (LTT) | Welsh Revenue Authority | gov.wales/land-transaction-tax |
Bands and thresholds differ between nations. Use the correct calculator for the location of the property, not your home address.
Your conveyancer calculates and pays it for you
In practice, your solicitor or licensed conveyancer works out the exact SDLT figure, includes it on your completion statement, files the land transaction return with HMRC and pays the tax within the 14-day deadline after completion (in England and Northern Ireland). However, knowing how the calculation works lets you budget accurately from the moment you start viewing properties, avoiding surprises at completion.