Stamp Duty or and-tax/residential-property-rates”>Stamp Duty Land Tax (SDLT) as it is known, is a tax on the purchase of properties and land in the UK and Scotland. It is a one-off lump sum compulsory tax that must be paid within 30 days of completing on a property. For customers taking out bridging finance, it is important that they incorporate the cost of stamp duty into the mix when buying a property and doing any refurbishments or rent out to tenants.

In short, when it comes to stamp duty, the more expensive your property, the more you pay. If you want more than one property, the more you pay. Simple.

How Much Stamp Duty Will I Pay?

The amount you pay in stamp duty will depend on the value of the property you are buying, whereby the higher your spend, the most tax you pay. Following the Chancellor’s Autumn Statement in December 2014, there has been a change to the traditional slab system which involved paying a single rate based on the property. Currently, we have a tiered structure which is more progressive and means you pay a portion based on every level.

Based on buying a property for £500,000:

Old system:

  • 1% on a property between £125,000 and £250,000
  • 3%  on a property between £250,000 and £500,000
  • So because the purchase price is over £250,000,  you would have paid £15,000 in stamp duty.

New system:

  • You pay nothing below £125,000, which is £0
  • You pay 2% between £125,000 and £250,000, which is £2,500 (based on taxable sum of £125,000)
  • You pay 5% on the value of the property above £250,000, which is £12,500 (based on taxable sum of £250,000)

So in total this means you’ll pay £15,000 (£0+£2,500+£12,500).

The new stamp duty calculations, whilst they may seem the same for a property worth £500,000, it benefits those buying properties below this. For instance, a property worth £300,000 previously would have incurred a stamp duty fee of £9,000, under the new system would only cost £5,000.

Stamp Duty on Additional Properties

Anyone buying an additional property (in addition to their main residence) will be subject to a much higher stamp duty, provided that the value of the estate is more than £40,000. In some cases, the cost of stamp duty for a second property can be double the cost of the first property’s stamp duty.

How Does Stamp Duty Work in Scotland?

The Scottish system does not refer to this tax as stamp duty anyway, following a reform by the Scottish Government in April 2015. It is now called Land and Buildings Transaction Tax and it still functions the same way as stamp duty – everyone has a set amount to pay based on buying a property or land costing more than £125,000.

The only difference with the Scottish system is the thresholds and percentages charged. See below:

UK: £0 – £125,000 (no fees)

Scotland: £0 – £145,000 (no fees)

UK: £125,000 to £250,000 (2%)

Scotland: £145,001 to £250,000 (2%)

UK: £250,000 to £925,000 (5%)

Scotland: £250,000 to £325,000 (5%)

UK: £925,000 to £1.5 million (10%)

Scotland: £325,000 to £750,000 (10%)

UK: £1.5 million+ (12%)

Scotland: £750,000 + (12%)

How To Pay Stamp Duty

Your solicitor that arranges your mortgage and property purchase will usually handle the stamp duty payment. They are usually very eager to get this paid for you which is why some solicitors will ask for the stamp duty money up front – and some will pay it after. By not paying your stamp duty within the 30 day window, you will be subject to the following fines:

Length of delay Amount of penalty
Documents late by up to 12 months 10% of the duty, capped at £300
Documents late by 12 to 24 months 20% of the duty
Documents late by more than 24 months 30% of the duty


If you want to pay your stamp duty yourself, without a lawyer, you need to find your unique 11-digit reference number (UTRN) which can be found online or via your stamp duty return. You can then pay the HMRC by phone or online through their bank account. Payments can take up to 3 days, so you are recommended to get payment in nice and early to avoid any fines. There are also options to pay by cheque, post or credit card (this will incur a fee). You may be required to present a valid pay-slip if you wish to pay by cheque or post as verification.

Stamp Duty Calculators

A stamp duty calculator can give you a quick calculation based on the cost of your property. We recommend the following tools:

and-transaction-tax-calculator-wales”>MoneyAdviceService Wales

and-and-buildings-transaction-tax-calculator-scotland”>MoneyAdviceService Scotland

and-tax/#/intro”>HM Revenue & Customs

 Cost of Moving House Calculator

Other Costs To Be Aware Of

Whether working on a buy-to-let or developing a new property, stamp duty is not the only cost that you need to be conscious of. Other key costs include buildings and contents insurance which will allow you to cover the cost of any potential mishaps to your property development. This can involve any damage to the building by flood, fire, peril, vandalism, fly-tipping or similar. Your contents insurance will cover you for any furniture or items inside that are at risk of theft or even materials used to renovate the building.

Public liability insurance is necessary in case any work carried out by your buildings has a detrimental impact on any neighbours or passersby e.g a roof tile falls and hits the neighbour’s car. Your liability cover accepts that you take responsibility and are willing to cover any repair or replacement costs.

When working on a development or property project, it is worth having an extra 10-20% in the kitty for any contingencies. This is extra money in case something goes wrong. For instance, what is you find asbestos on the property and have to hire a professional to remove this? What if there is very bad snow weather and this delays your project by several weeks, requiring you to pay your contractors more? You can never be sure when something unexpected will arise, so having that extra money spare can be crucial.

Other additional fees include the ‘arrangement fees’ charged by lenders who put together your application prior to funding your purchase. This is part of underwriting and carrying out checks to see if you are suitable for their financial product. This is usually around a 1% fee of the total loan value and is seen as a commitment between you and the lender which is why most lenders require this to be paid before the loan draw down.

Other fees include broker fees of around 2% which are collected upon the funding of a loan. With so many variations and bridging products available, a quality broker can help you source the best provider and save money with the most suitable rates and product.

Further fees include the cost of valuing your property which is required by the lender prior to funding your application. The cost of the valuation may vary based on the value of the property and each lender will use an independent surveyor. This is likely to be also be around 1% of the loan value, but will vary.

Finally, your solicitor will be crucial during the funding process, reviewing the loan contracts, reports from the surveyor and making sure all aspects run smoothly and are paid on time. You will incur solicitor fees, again, depending on who you use and the cost will depend on the complexity and scale of the project.