Do You Pay Stamp Duty When Selling a House?

Selling a home always comes with a bunch of stress and complicated questions, and one of the biggest concerns is the fees. One fee question on a lot of homeowners’ lips is ‘Do you have to pay stamp duty when you sell a house?’ 

Luckily for you, at Jon Simon, we’ve got over 15 years of experience in the property market. With a multitude of quality properties on sale across Bacup, Burnley, Radcliffe, and Ramsbottom we’re here to get to the bottom of this question. In this blog, we’ll go into detail about what stamp duty is, as well as tell you whether you need to pay it or not. 

Let’s dive into stamp duty in a bit more detail and find out ‘do you pay stamp duty when selling a house’…  

What is stamp duty? 

Stamp duty, also known as Stamp Duty Land Tax (SDLT) is a tax paid by the buyer of a UK residential property when the purchase exceeds £250,000. Stamp duty rates can range from 5%-12% depending upon the value of the property bought, the purchase date, and whether you are a multiple homeowner. 

It’s designed to generate revenue for the government and can also be used to influence the housing market, such as discouraging property speculation. You pay stamp duty tax when you: 

• Buy a freehold property
• Buy a new or existing leasehold
• Buy a property through a shared ownership scheme
• Take on a mortgage or buy a share in a house 

Who pays stamp duty? 

It is always the home buyer who pays stamp duty, not the seller or landlord. Usually, your solicitor will pay it on your behalf as part of the purchase process. They will also claim any tax relief that you might be eligible for. You will have to file the stamp duty return, which can be done online or in the post, and pay the tax yourself if they don’t do this for you. 

How much is stamp duty? 

There are several different band rates for stamp duty and you can be expected to pay stamp duty on the purchase of your main property costing more than £250,000 unless you are a first-time buyer (more on this below!). 

Buyers of homes worth less than £250,000 don’t pay stamp duty. This was doubled from £125,000 under Liz Truss’s mini-budget in September 2022. The threshold is £425,000 for those buying their first property, which was raised from £300,000 as part of the mini-budget. These higher thresholds will end in March 2025 when they are expected to revert to previous levels. 

If you already own a residential property worth £40,000 or more and you buy another, then you will have to pay an additional 3% on top of the rates above – this will rise to 5% from 31 October. 

Here’s an example to make it easier for you. If you buy a house for £350,000, the Stamp Duty Land Tax that you owe is calculated like this:

• 0% on the first £250,000 = £0
• 5% on the amount from £250,001 and £350,000 = £5,000 

Therefore the total stamp duty to pay = £5,000 

For more information about tax, check out our blog post: Tax To Know About When Selling Your House. 

Stamp duty rates

The table below shows the current stamp duty rates and thresholds for buyers in England and Northern Ireland: 

Can stamp duty affect selling a house? 

At a glance, it can seem like stamp duty only affects the buyer. However, stamp duty can indirectly impact you as a seller. This happens because when a potential buyer is budgeting for a house purchase, they have to factor in all associated costs, with one of the most significant costs being stamp duty. 

This tax can add a considerable amount to the total sum that a buyer needs to pay to secure their property. So, if a stamp duty on a home is particularly high, it could discourage potential buyers or might reduce the amount they’re willing to offer for your property. 

In essence, the higher the stamp duty, the less money the buyer might have available to put towards your asking price. 

Stamp duty exceptions and special circumstances

With most things, there are some reliefs and exemptions when it comes to stamp duty. Some of these include: 

• If the value of the freehold is less than £40,000
• There is a licence to occupy
• If the property was a gift of land
• The transfers of land in a divorce or on death
• The transfer of land to a charity
• The transfer of land within a group of companies where an SDLT group relief claim is made 

If you are a first-time buyer in England and Northern Ireland, then you might be eligible for first-time buyer relief on purchases of residential property up to £625,000. However, it’s worth noting that first-time buyer stamp duty relief is due to come to an end on 31 March 2025. 

Learn about stamp duty and more with Jon Simon 

Hopefully, you now have the answer to the question ‘Do you pay stamp duty when buying a house’. In short, stamp duty is always paid by the person buying the property and it is eligible for homes over £250,000. 

For over 15 years we’ve been successfully selling and managing properties, so, if you’re selling your house or are interested in renting, we’re here for you every step of the way, whether that’s making an offer or signing the final contract. 

For further enquiries, please don’t hesitate to contact us. Or, request a free online valuation and discover exactly how much your home could be worth today! You can also check out our blog for similar topics.