Understanding Stamp Duty Changes and Rates on Residential Property in London

Stamp duty is based on the selling price when buying a residential property in England or Northern Ireland, which can lead to a sizeable bill for London buyers – so it’s important to understand any stamp duty changes and the rules that determine how much you pay. 
 
Rightmove estimates that properties across Marylebone, St John’s Wood and Maida Vale achieved average selling prices between £900,000 and £1,900,000 in the last 12 months. In neighbouring Regent’s Park, detached properties fetched an average of £1.5m. 

As a result, homebuyers in the local area are likely to fall into the highest stamp duty band. But other factors can influence how much your stamp duty is when you buy a North West or Central London property. 

Our guide explains everything you need to know about stamp duty changes, second property surcharges, first homes, using a stamp duty calculator, and more. 

What Is Stamp Duty? 

Stamp Duty Land Tax (SDLT) is a one-off tax paid when you buy land or a residential property in England and Northern Ireland that costs more than £125,000. The exact amount you pay on property or land depends on which stamp duty band the property falls into, if you’ve owned property before, or currently own multiple residential properties. 

In Wales and Scotland, the Stamp Duty Land Tax rules are different. In Scotland, you pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT).  

Who Pays Stamp Duty? 

It is always the buyer that pays stamp duty. Usually, your solicitor will pay stamp duty on your behalf as part of the sale process. 

How Much Is Stamp Duty? 

The amount of stamp duty you owe depends on the property’s purchase price, whether you have owned property before, are an overseas buyer, or are buying an additional property. There’s also a higher rate of stamp duty for a limited company. It is a progressive tax, meaning you pay a higher percentage of stamp duty as the property price rises – but you only pay the higher rate for the portion of the price that falls within the rate band. 

Want to know more?  Read about how to choose an estate agent in Central London, discover our first time buyer guide for Central London and explore our guide to capital gains tax when selling a property.

Stamp Duty Changes 2025 

Current stamp duty rates changed on 1^st April 2025, and most buyers now have to pay more stamp duty as a result. Factor the stamp duty change into your budget, as it will almost certainly affect your SDLT bill on London property.  

The current rates of stamp duty from April 2025 are as follows for a main-home property purchase: 

Property price thresholds	SDLT rate
Up to £125,000	0%
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

How Do I Calculate My Stamp Duty Bill? 

The amount you owe is calculated based on the portion of the property price within each band. This is easiest to explain using an example. 

If you buy a three-bedroom apartment in Central London with a price of £1,250,000 as your main residence, then the normal rates of stamp duty will apply, and you will pay the following: 

SDLT Band	Rate	Tax on This Portion
£0 – £125,000	0%	£0
£125,001 – £250,000	2%	£2,500
£250,001 – £925,000	5%	£33,750
£925,001 – £1,250,000	10%	£32,500

Total SDLT = £68,750 

You can estimate your bill before buying a property with an online stamp duty calculator. Use the HMRC’s stamp duty calculator to determine how much you will have to pay. 

Can I Claim First-Time Buyer Relief? 

As of 1st April 2025, first-time buyers in England and Northern Ireland do not pay any stamp duty on the first £300,000 on properties with a selling price up to £500,000 and 5% on between £300,001 and £500,000. If the property costs more than £500,000, buyers will pay stamp duty at the standard rates. 

What Is A First-Time Buyer? 

A first-time buyer is a person who has never owned a residential freehold or leasehold property within the UK or abroad and is making a first purchase as their main residence. This means you can’t claim first-time buyer stamp duty relief if you are purchasing a buy-to-let, even if you haven’t owned a property before. However, you may rent out a room in a main residential home. 

You do not qualify if you have ever owned or inherited property in the past or if you have previously been named on the deeds of another property. 

Nor does first-time buyer relief apply if you are married and your partner has previously owned a property but you have not. 

How Much Is Stamp Duty For A Second Home? 

If you’re buying a second home, you’ll be subject to increased stamp duty rates. As HMRC states: “You’ll usually have to pay 5% on top of SDLT rates if buying a new residential property means you’ll own more than one.”

The higher stamp duty rate is applied to any property not used as the owner’s main residence. In other words, higher rates apply to holiday homes and buy-to-let properties. 

What Are Stamp Duty Thresholds For Additional Properties? 

For the purchase of an additional property, the stamp duty bands are as follows according to HMRC. You’ll notice that essentially 5% is added to each band when compared to the standard residential SDLT rates.

Property cost thresholds for additional property	SDLT rate
Up to £125,000	5%
The next £125,000 (£125,001 to £250,000)	7%
The next £675,000 (£250,001 to £925,000)	10%
The next £575,000 (£925,001 to £1.5 million)	15%
The remaining amount (the portion above £1.5 million)	17%

What If I’m An Overseas Buyer? 

From 1st April 2021, non-UK residents buying property in England or Northern Ireland must pay a 2% surcharge on top of the existing stamp duty rates. If non-UK residents purchase a second property, they must pay both the second home and the overseas buyer surcharges. 

So, let’s use an example where a person purchases a home for £300,000, and is both an overseas buyer and a second property buyer:

They would pay £26,000 total in SDLT, calculated by applying the tiered rates alongside the surcharge (7%, 9%, and 12%) to each portion of the price:

• £0 to £125,000 at 7% (5% + 2% surcharge) = £8,750
• £125,001 to £250,000 at 9% (7% + 2% surcharge) = £11,250
• £250,001 to £300,000 at 12% (10% + 2% surcharge) = £6,000

Total SDLT = £26,000

Overseas buyer status depends on your location, not citizenship or residency status (though there’s civil service and armed forces relief). To qualify as a UK buyer, you or the civil partner or spouse you’re buying with should have stayed in the UK for at least 183 days (6 months) out of the 12 months before the property purchase date. 

Want to know more?  You can also read about the costs of selling and buying a home, discover tips on what a mews house is and tips for buying one and explore things to do when moving house in Central London.

When Can I Claim A Stamp Duty Refund? 

If your home hasn’t sold yet, but you’ve bought a new primary residence, you may be subject to additional property rates – but you can get a refund. To qualify, you must sell your original main residence within three years. 

Then you have 12 months from the sale of the original main residence, or 12 months of your SDLT tax return filing date, to claim the refund. You can claim until the latter of the two dates. Check the gov.uk guidance for the full details. 

Can I Add Stamp Duty To My Mortgage? 

Adding stamp duty to your mortgage is possible, but it will probably be more costly in the long run. You will pay interest on the sum for the duration of your mortgage. Adding stamp duty to a mortgage also affects your loan-to-value (LTV) ratio. 

What About Stamp Duty For Limited Company Purchases? 

The rates for SDLT are different for limited companies purchasing properties compared to buying a property as an individual. These rules are complex, depending upon the circumstances of the purchase, so it is always best to enlist the help of a specialist tax advisor if you’re in this position. 

Does a limited company pay stamp duty on residential property? 

Yes, a limited company is usually required to pay stamp duty on residential property under their tax obligations. However, the exact rate of stamp duty varies depending upon the details of the purchase. 

How much is stamp duty for a limited company? 

For limited company property purchases, there are two rates of stamp duty which may apply. These are either: 

1. The higher rates of stamp duty 

Companies will usually pay the higher rate of stamp duty (tabled earlier) for any residential property purchased if it costs more than £40,000, and when the home they buy is not subject to a lease which has more than 21 years left on it.

2. The 17% rate for certain company purchases 

The 17% rate applies to companies purchasing property over £500,000. However, there are various exemptions to this particular rate.  

The most prominent is the fact that it does not apply to rental businesses purchasing property for the specific purpose of letting it. In the words of the law, the 17% SDLT rate does not apply to properties bought “exclusively for the purpose of exploitation as a source of rents or other receipts in the course of a qualifying property rental business”. 

Here are the other exemptions that stop companies paying the standard 17% rate for corporate bodies: 

• If the home is bought by a property developer or trader 
• If the property is used in a trade which makes the property available to the public 
• If a property is bought by a financial institution in the course of lending 
• If the home is occupied by employees of the purchaser 
• If the property is a farmhouse 
• If the property is bought by a qualifying housing co-operative 

Many landlords have set up limited companies in order to purchase property for the exclusive purpose of renting it out to tenants. Where this is the case, they are usually exempt – but always get specialist advice to confirm what reliefs apply to your circumstances. 

Can you transfer property to a limited company without stamp duty? 

Generally, you are required to pay stamp duty when you transfer property to a limited company. However, there may be other tax efficiencies you can achieve through transferring to a limited company. For example, if the property transfer is part of incorporating a whole rental business into another company, or if the property qualifies as a ‘gift’ to the company without payment being made. 

This is a complex area of stamp duty, so you will need a qualified accountant to provide specialist advice on this option. 

Can a limited company claim back stamp duty? 

Refunds on stamp duty usually apply when you sell your main home within three years of buying a new one. However, if stamp duty has been overpaid due to a mistake, you can claim a refund as a limited company. 

When Is Stamp Duty Not Payable? 

If a property changes hands because of divorce or dissolution of a civil partnership, then stamp duty is not payable. 

Property left to you in a will or gifted to you is also exempt from stamp duty. However, if you exchange properties with another person, you must pay stamp duty on the property you received. 

Can I Reduce The Stamp Duty I Pay? 

You cannot usually avoid paying stamp duty, but you may be able to reduce your bill if you meet certain criteria or make the right offers. Buyers might make savings on stamp duty in the following circumstances. 

1. You are a first-time buyer 

As a first-time buyer, you won’t pay any stamp duty on the property’s purchase price up to £300,000, and a reduced rate up to the maximum purchase price of £500,000.

2. You make a lower offer on a property 

You can try negotiating to keep the total property price within a lower band, though this can be a risky strategy in a competitive property market. 

3. You accept new home SDLT incentives 

Developers may cover the stamp duty on new builds priced above the stamp duty threshold as an incentive for the purchase. 

4. Second home surcharge refund 

If you paid second home surcharge but sell your original main residence within 3 years, you can apply for a refund on the overpaid stamp duty. 

5. Deduct fixtures and fittings 

If you buy movable items (e.g. carpets, white goods or furniture) from the seller, you can deduct this from the price. Never inflate the cost to reduce your stamp duty bill. HMRC investigate property transactions, and you could face a penalty for tax avoidance. 

Do You Pay Stamp Duty on Lease Extension? 

Expect to pay stamp duty on leasehold property purchases and lease extension premiums over £125,000. However, if you own multiple properties or are married to someone who owns more than one property, the threshold can drop to £40,000. 

Want to find out more?  Explore our articles on staging your home to sell in Central London, find out about the cost of selling a house and learn about what a mortgage decision in principle is.

Are There Any Exceptions That Mean I Can Avoid Paying Stamp Duty? 

You can’t avoid paying stamp duty unless you meet strict criteria, so speak to a solicitor or specialist. Eligibility for exemption can include: 

1 Inherited property exemptions 

If you inherit a property, stamp duty is usually covered by an exemption. 

2 First-time buyers’ relief 

If you’re buying your first home, and the property is priced below the threshold, then you can pay less stamp duty or none at all. 

3 Divorce settlements 

You don’t usually pay stamp duty if you’re transferred the property through a court order as part of the divorce settlement. 

4 Gifted property 

There’s usually no stamp duty on gifted property. But the rules on gifting property and stamp duty can be complex when transferring a share of the property to your spouse. 

5 Purchased by employers 

Employers who buy a house for an employee (e.g. for relocation) may claim SDLT relief. 

6 Transferring property within a limited company 

It’s sometimes possible to transfer property to a company without stamp duty if both parties are companies within one group. Again, this requires specialist input to determine correctly – so make sure you get the right legal/tax advice. 

How And When Do I Pay Stamp Duty? 

Your conveyancing solicitor will typically file your stamp duty return and pay the stamp duty tax on your behalf, and claim any relief you’re entitled to, as part of the selling process. You will pay this within their overall fees. 
 
If they don’t, it’s important to check the Government website for guidance on filing a return and making the payment yourself. Payment of SDLT must be made within 14 days of the completion date. 

Are Further Changes Planned For Stamp Duty? 

There has been a lot of speculation that the Autumn Budget will introduce changes to stamp duty including replacing stamp duty with an annual property tax for purchases over £500,000.  

The Budget will be announced on 26th November 2025 and many property experts are predicting either increased stamp duty rates or a new annual property tax. There have also been indications that a ‘mansion tax’ could be applied on properties valued over £1.5m. However, all this is yet to be decided, so be sure to check the terms of the budget when it is released. 

And Finally 

If you plan on buying a property in Baker Street, Fitzrovia, Primrose Hill, Mayfair or moving from elsewhere in Central London to a commuter town, contact Kubie Gold. We’ll be happy to show you our current selection of properties and advise you on Stamp Duty Land Tax or other aspects of your house purchase, like getting a mortgage decision in principle.