Stamp duty when moving home

Stamp Duty Land Tax (SDLT) applies when you buy a residential property in England or Northern Ireland for more than £125,000. Scotland has Land and Buildings Transaction Tax (LBTT) and Wales has Land Transaction Tax (LTT), each with different rates and thresholds.

Since 1 April 2025, the nil-rate band for home movers reverted from the temporary £250,000 threshold back to £125,000. This means most people moving home now pay more stamp duty than they would have during the temporary relief period.

These rates are marginal, meaning you only pay the higher rate on the portion of the price within each band. You do not pay the top rate on the entire purchase price. For example, on a £300,000 property, you pay 0% on the first £125,000, 2% on the next £125,000 (£2,500), and 5% on the remaining £50,000 (£2,500), giving a total of £5,000.

First-time buyers benefit from a separate, more generous nil-rate band of £300,000 on properties up to £500,000. If you are moving home rather than buying for the first time, you use the standard rates above.

Your stamp duty bill depends on the purchase price of your new property. The tax is calculated on a slice system, similar to income tax bands. Each portion of the price falling within a band is taxed at that band's rate, and the amounts are added together.

You pay stamp duty on the full purchase price, not on the difference between your old and new property. If you sell a home for £250,000 and buy one for £350,000, your stamp duty is calculated on the full £350,000, giving a bill of £7,500.

Your solicitor or conveyancer handles the SDLT return on your behalf. The return must be filed with HMRC and the tax paid within 14 days of completion, even if you believe no tax is due. Late filing attracts an automatic £100 penalty, plus interest on any unpaid amount. Use a moving home calculator to estimate your total upfront costs, including stamp duty, before making an offer.

If you buy a new home before selling your existing one, you temporarily own two residential properties. In this situation, you pay the higher rates of stamp duty, which add a 5% surcharge to every band. This surcharge increased from 3% to 5% on 31 October 2024.

The difference is substantial. On a £300,000 home, the surcharge adds £15,000 to your stamp duty bill. This is why many people try to align their sale and purchase to complete on the same day, forming a property chain.

However, chains break down frequently. If your buyer pulls out at the last minute or your chain collapses, you may need to complete on the new purchase before your old home sells. In that case, you pay the higher rate upfront but can apply for a refund later. If you are downsizing your home or upsizing to a larger property, planning the timing of your sale carefully can help you avoid paying the surcharge altogether.

If you paid the higher rate because you owned two properties at the time of purchase, you can claim a refund of the 5% surcharge once you sell your previous main residence. The key rules are:

• Time limit: You must sell your old home within 36 months of buying the new one
• Intention: The new property must be your main residence
• Claim deadline: You must submit your refund claim within 12 months of selling the old property, or within 12 months of filing the SDLT return for the new purchase, whichever is later
• Method: Apply to HMRC using the online SDLT refund process or by writing to the Stamp Taxes office

HMRC typically processes refund claims within 15 working days. The refund covers the full 5% surcharge amount. On a £300,000 property, that is a £15,000 refund.

To make a successful claim, keep records of your old property's sale completion date, the SDLT return reference from your new purchase, and evidence that the new property became your main residence. Your solicitor can handle the claim, though many home movers submit it themselves through HMRC's online service.

If you are porting your mortgage to a new property, your broker can advise on the best timing to minimise stamp duty exposure while keeping your existing mortgage deal.

Several exemptions and reliefs can reduce or eliminate your stamp duty bill when moving home:

• Transfer due to divorce or separation: If property is transferred between spouses or civil partners as part of a court order following divorce or dissolution, no SDLT is payable
• Inherited property: You do not pay SDLT on property you inherit. However, if you already own an inherited share in another property, it may count as a second property when you buy your new home
• Properties below £125,000: No SDLT is due on the first £125,000, so any property at or below this threshold is stamp duty free
• Shared ownership: You can choose to pay SDLT on the initial share only or on the full market value, depending on which approach gives a lower total over time

There is no general stamp duty relief specifically for home movers. The first-time buyer relief, which provides a nil-rate band of £300,000, only applies to people who have never owned a property before. If you have previously owned a home, even if you sold it years ago, you pay the standard rates.

Non-UK residents pay an additional 2% surcharge on top of all rates. If you are a UK resident moving within the country, this does not apply. For home movers buying a property using a competitive mortgage rate, keeping your total upfront costs as low as possible is important. Factor stamp duty into your budget alongside mortgage fees, legal costs, and removal expenses. Getting an accurate picture from a specialist moving home lender helps you avoid nasty surprises at completion.