Depending on the value of your new home, whether you are a first-time buyer and whether it is the only home you own you may have to pay a government tax when you buy it.
Stamp Duty Land Tax is payable on homes bought in England.
Land and Buildings Transaction Tax is payable on homes bought in Scotland.
Paying the tax
It is a legal requirement for all changes in land and property ownership to be registered with HM Land Registry in England or the Land Register of Scotland.
To register you as a new homeowner, it is necessary to obtain a certificate from Her Majesty’s Revenue and Customs (HMRC) or Revenue Scotland to confirm that any applicable taxes have been paid.
This is a piece of background work that is completed by your solicitor as part of your house purchase, it is not something that you have to initiate yourself.
How much tax is payable?
Homes bought in England - Stamp Duty Land Tax (SDLT)
If you are buying a home that costs less than £250,000 no SDLT is payable. Above this level, SDLT rates increase on a sliding scale based on the price of the home you are buying.
Current rates, with the exception of first-time buyers and those buying a second home or a buy to let property, are as per the table below.
| Purchase price | Tax rate |
|
Up to £250,000 |
0% |
| 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% |
If you are a first-time buyer you will not have to pay SDLT when you buy your first home if the purchase price is £425,000 or less. For properties costing between £425,000 and £625,000, you will not have to pay any Stamp Duty on the first £425,000, but a 5% tax will apply on the portion of the property's value between £425,001 to £625,000. If the price is over £625,000, you will pay the same level of tax as people who have bought a home before.
If you are buying a property that is a second home or for the purposes of buy to let, there may be an additional level of tax payable.
For an easy way to find out how much SDLT you may have to pay, visit the HMRC website, which contains an easy to use SDLT calculator. This takes into account all relevant factors including whether you are a first-time buyer or not.
Homes bought in Scotland - Land and Buildings Transaction Tax (LBTT)
If you are buying a home that costs less than £145,000 no LBTT is payable.
Above this level, LBTT rates increase on a sliding scale based on the price of the home you are buying. Current rates, with the exception of first-time buyers, are as per the table below.
| Purchase price | Tax rate |
| Up to £145,000 | 0% |
| £145,001 to £250,000 (the portion from £145,001 to £250,000) | 2% |
| £250,001 to £325,000 (the portion from £250,001 to £325,000) | 5% |
| £325,001 to £750,000 (the portion from £325,001 to £750,000) | 10% |
| More than £750,000 (the portion above £750,000) | 12% |
First-time buyers in Scotland benefit from relief on LBTT. The relief effectively raises the zero tax threshold for first-time buyers from £145,000 to £175,000. Those buying a property for more than £175,000 will receive relief on the portion of the price below the threshold.
If you are buying a property that is a second home or for the purposes of buy to let, there may be an additional level of tax payable. This is known as the Additional Dwelling Supplement.
For an easy way to find out how much LBTT you may have to pay, visit the Revenue Scotland website, which contains an LBTT calculator and guidance on how to use it.