How much stamp duty will you pay when you move home?

Moving home comes with plenty of costs, but stamp duty is usually the biggest one after your deposit. And unlike your deposit, it does not buy you anything. It is a tax and it is paid in cash. Your solicitor will ask you for the money shortly before completion, then pay it to HMRC on your behalf.

If you are moving within North London or Hertfordshire, where a family home often sits somewhere between £450,000 and £1 million, stamp duty can easily run to £20,000 or more. Here is how it works, what you are likely to pay at typical local prices, and how to plan for it.

How does stamp duty work when you move home?

Stamp Duty Land Tax (SDLT) applies when you buy a property in England or Northern Ireland. The good news is that you only pay each rate on the slice of the price that falls within that band, not on the whole amount.

At the moment, the rates for buying your next main home are:

• Up to £125,000: nothing
• £125,001 to £250,000: 2%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Above £1.5 million: 12%

If you are selling your current main home and buying a new one, these standard rates are all you pay. The higher rates for second properties do not apply, even if you own a buy-to-let in the background, as long as you are replacing your main residence.

How much stamp duty will you pay at typical local prices?

Here is what the sums look like at prices you will recognise if you are searching in North London or Hertfordshire at the moment:

• £450,000 (a typical Hertfordshire terrace or London flat): £12,500
• £600,000 (a three-bed family home): £20,000
• £750,000 (a larger family home): £27,500
• £1,000,000 (a detached home in the nicer pockets): £43,750

It is worth seeing these numbers early. A £20,000 tax bill on a £600,000 move is the sort of figure that changes your budget, and it is far better to build it into your plans at the start than to discover it after you have fallen in love with a house.

Do home movers get the first-time buyer discount?

No. First-time buyer relief only applies if every buyer on the purchase is a first-time buyer. If that is you, you currently pay nothing up to £300,000 and 5% on the portion between £300,000 and £500,000. Above £500,000 the relief disappears entirely and standard rates apply to the whole price.

So a first-time buyer paying £450,000 owes £7,500, while a home mover buying the same property owes £12,500. If you are buying your first home, our guide for first-time buyers in North London and Hertfordshire covers this in more detail.

What happens if you keep your current home?

This is where stamp duty bills jump. If you still own your current home at the end of the day you complete on the new one, you pay an extra 5% on top of every band, from the first pound.

On a £600,000 purchase, that surcharge adds £30,000, taking the total bill to £50,000. The same applies if you are keeping your current home to let it out, often called let-to-buy. Our post on buy-to-let looks at the landlord side of that decision.

There is an important safety net. If you complete on the new home before your old one sells, you pay the surcharge upfront but can claim it back in full from HMRC, provided you sell your previous main home within three years. You need to make the claim within 12 months of that sale. The refund only applies when the new property replaces your main home, so if you are keeping your current home as a second home or to let out, the surcharge is not refunded.

Can you add stamp duty to your mortgage?

Not directly. Stamp duty is paid in cash through your solicitor, so it comes out of the same pot as your deposit and moving costs.

Some movers choose to put down a slightly smaller deposit to keep cash back for the tax bill. That can work, but a smaller deposit means borrowing at a higher loan to value, which can mean a higher interest rate. It is a balancing act, and the right answer depends on the rest of your numbers. Our posts on how much deposit you really need and how much you can borrow are useful companions here.

When do you actually pay stamp duty?

On completion day. Your deposit usually goes to your solicitor earlier, before you exchange contracts, but the stamp duty is normally requested a few days before completion, as part of the completion statement. Your solicitor then files the return with HMRC and pays the tax on your behalf. Legally the return and payment are due within 14 days of completion, but in practice your solicitor will not complete without the funds already in place.

How we can help

Stamp duty is only one piece of the moving puzzle. The real question is usually what you can afford once the tax, the deposit, the moving costs and the new monthly payment are all on the table together.

That is exactly what we help with. We work with home movers across North London, Hertfordshire and the rest of the UK, and we will put the whole picture together for you before you start making offers.

Email us at solomon@kudosmortgages.com or book a call at a time that suits you through the website, and we will take it from there.

Frequently asked questions

Do you pay stamp duty when you sell a house?

No. Stamp duty is only paid by the buyer. When you move, you pay it on the home you are buying, not the one you are selling.

Is stamp duty different in Scotland and Wales?

Yes. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax, each with its own bands and rates. The figures in this post apply to England and Northern Ireland.

Will I pay the surcharge if my new home completes before my old one sells?

Yes, you will pay the extra 5% at completion. But if you sell your previous main home within three years, you can claim the full surcharge back from HMRC.

Can stamp duty rates change?

Yes. Rates and thresholds are set by the government and can move at any Budget, so the figures here are correct at the time of writing. It is always worth checking the current rates before you commit to a purchase.