Do you pay Stamp Duty when you sell a house?

Selling your home involves various costs and considerations, but there's good news when it comes to Stamp Duty Land Tax (SDLT) - sellers don't have to pay it. Here's everything you need to know about Stamp Duty when selling your property.

Key takeaways

• Sellers are not responsible for paying Stamp Duty
• The buyer pays Stamp Duty Land Tax on properties over £250,000
• Different rates apply for first-time buyers and additional property purchases
• Regional variations exist in Scotland and Wales
• Sellers may be eligible for a Stamp Duty refund when selling their main home after acquiring a new one. Eligibility criteria include specific timeframes and surcharges associated with owning multiple properties, and the need to complete the necessary online tax returns to process the refund.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax paid by the buyer when purchasing a property in the UK. It is a type of property tax that is levied on the purchase price of a property. The amount owed is based on the price paid for the property, with differing bands for different property values and ownership statuses.

The purpose of SDLT is to raise revenue for the government and to regulate property transactions. Understanding Stamp Duty is crucial for anyone involved in property purchase, as it can significantly impact the overall cost.

Who pays Stamp Duty when a house is sold?

The responsibility for paying SDLT falls entirely on the buyer, not the seller. Stamp Duty tax is calculated based on the property’s purchase price, and buyers need to budget for this tax when buying a property.

While sellers need to budget for various other costs associated with selling their property, Stamp Duty isn’t one of them.

What costs do sellers need to consider instead?

Although sellers don’t pay Stamp Duty, there are several other expenses to factor into your budget when selling your home:

Property value significantly influences various costs, including estate agent fees. Higher property values can lead to increased costs, affecting overall expenses.

Estate agent fees

Typically ranging from 0.75% to 3% of the final sale price, estate agent fees often represent the largest cost for sellers. For a £300,000 property, this could mean paying between £2,250 and £9,000.

Conveyancing fees

Legal fees for the conveyancing process usually cost between £500 and £1,500. This covers the legal work required to transfer property ownership from seller to buyer.

Energy Performance Certificate (EPC)

An up-to-date EPC is legally required when selling your property. This typically costs between £60 and £120 and remains valid for 10 years.

Removal costs

Depending on the size of your property and the distance you're moving, removal services can cost anywhere from £400 to £1,500 or more.

Understanding Stamp Duty for buyers

While sellers don’t pay Stamp Duty, it’s useful to understand how it works for buyers, especially if you’re planning to purchase another property after selling.

Stamp duty applies to both residential and non-residential properties that exceed certain price thresholds, and it is important to be aware of the current rates and regulations.

Current Stamp Duty thresholds (as of April 2024)

• £0 to £250,000: 0%
• £250,001 to £925,000: 5%
• £925,001 to £1.5 million: 10%
• Over £1.5 million: 12%

First-time buyers benefit from more generous thresholds, paying no Stamp Duty on the first £425,000 of their purchase.

Exemptions and Reliefs

First-Time Buyer Relief and Other Exemptions

There are several exemptions and reliefs available to reduce the amount of SDLT payable. First-time buyers, for example, do not have to pay SDLT on properties up to a certain value.

In England and Northern Ireland, first-time buyers do not pay SDLT on properties up to £425,000, while in Scotland, the starting threshold for first-time buyers is £175,000.

Additionally, there are exemptions for properties left to individuals in a will and for certain types of property transactions, such as those involving charities or public bodies.

These exemptions and reliefs can make a significant difference in the overall cost of purchasing a property.

Regional variations

It's important to note that Stamp Duty rules vary across the UK:

Scotland

In Scotland, Land and Buildings Transaction Tax (LBTT) replaces Stamp Duty. The thresholds and rates differ from those in England and Northern Ireland, but the principle remains the same - buyers pay, not sellers.

Wales

The Land Transaction Tax (LTT) applies in Wales, with its own set of thresholds and rates. Again, this is a buyer's responsibility rather than a seller's.

Common misconceptions about Stamp Duty

Many people confuse various aspects of Stamp Duty, so let's clear up some common misunderstandings:

Myth: Sellers must pay Stamp Duty on their profit

This is incorrect. Capital Gains Tax might apply to profit from selling a second property, but Stamp Duty is never charged to sellers.

Myth: Stamp Duty rates are negotiable

The rates are set by the government and are non-negotiable. However, some buyers might try to negotiate the purchase price to help offset their Stamp Duty costs.

Recent changes to Stamp Duty

Temporary measures and reliefs

The UK government has introduced several temporary measures to ease the burden of SDLT on buyers. These changes, introduced in autumn 2022, were designed to stimulate the housing market, although they are currently scheduled to end on March 31st 2025.

The temporary measures include a reduction in the SDLT threshold from £125,000 to £250,000, and a reduction in the SDLT rate for properties worth between £250,000 and £925,000.

Past changes have created a dynamic market where sellers have benefited from increased buyer interest, as lower SDLT costs can make properties more affordable.

From March 31st 2025, SDLT rates will return to their previous levels.

Our expert advice

When selling your property, focus on the costs you will need to pay rather than Stamp Duty. Consider getting multiple quotes for estate agent services and conveyancing to ensure you're getting the best value for money.

Remember to factor these costs into your calculations when deciding on your asking price and evaluating offers.

Remember that while you won't pay Stamp Duty as a seller, if you're buying another property, you'll need to account for this tax in your moving budget. Consider consulting with a financial advisor or property professional to understand all the costs involved in your specific situation.