Stamp Duty on a mortgage client's purchase: 0% to £125,000, first-time buyer relief to £500,000 and the 5% surcharge, worked

A mortgage client has found a home at £400,000 and asks what Stamp Duty will be. The adviser wants it on the case file beside the deposit, the valuation fee and the legal costs. The bands sit on one GOV.UK page, and the working is quick enough to do for every case.

The rates on GOV.UK

The page gives these residential rates for England and Northern Ireland:

Each rate applies only to the slice of the price inside that band, not to the whole price. First-time buyers pay 0% on the first £300,000 and 5% on the part from £300,001 to £500,000. The page says relief is not available if the price is over £500,000. It also says: "You usually pay 5% on top of these rates if you own another residential property."

The page's own examples, checked

• £295,000 purchase: £125,000 at 0% is £0, £125,000 at 2% is £2,500, and the last £45,000 at 5% is £2,250. The slices add up to £295,000, and the tax to £4,750, which matches the page.
• First-time buyer at £500,000: £300,000 at 0% is £0, and £200,000 at 5% is £10,000. The page's total is £10,000.

Six prices, one home

For a single home with no relief:

Checks: the 5% slice is the price minus £250,000, times 0.05. For £400,000 that is £150,000 x 0.05 = £7,500. For £625,000 it is £375,000 x 0.05 = £18,750. For £925,000 it is £675,000 x 0.05 = £33,750. Each total is £2,500 plus the 5% slice.

First-time buyer relief, and where it stops

At £400,000 the buyer pays 5% on £100,000, which is £5,000. At £600,000 the standard bands apply in full: £2,500 + (£350,000 x 0.05) = £2,500 + £17,500 = £20,000.

The relief is worth £5,000 at every price from £300,000 to £500,000, then nothing. A buyer at £500,000 pays £10,000. At £500,001 the standard bands apply, which comes to about £15,000, so one extra pound of price costs about £5,000. A client who is first-time buyer at £510,000 and could negotiate to £500,000 saves much more than the £10,000 on the price, and that is worth flagging to the adviser. The page does not define who counts as a first-time buyer, and I did not read that rule, so check the conditions on GOV.UK before relying on it for a joint purchase.

The 5% surcharge

If the purchase means the client owns more than one home, the page says to add 5% on top of the standard rates. Adding it across the whole price, which is how we read "on top of these rates" (the page example for it was not read):

Checks: £295,000 x 0.05 = £14,750, £400,000 x 0.05 = £20,000 and £625,000 x 0.05 = £31,250. The surcharge on a £295,000 home is more than three times the standard bill (14,750 / 4,750 = 3.1). The page does not set out which situations count as owning another home, such as a sale that has not yet completed, and I did not read that, so the adviser should confirm the client's position.

What to put on the case file

• Price and buyer type. Record the agreed price, whether anyone is a first-time buyer, and whether any buyer already owns property.
• The sum, with its source. Show the slices, as in the tables above, and note the date you read the rates. The bands can change, and I could not check from the page when.
• Cash needed on completion. The deposit, the Stamp Duty and the fees together decide whether the case works, so the paraplanner can total them for the adviser's review. For how a case file is checked afterwards, see the client file checklist and the suitability report file check.
• Identity and source of funds. A purchase with a large deposit needs the checks in the electronic ID guide done first.

Overlyft builds AI staff who join your advice team and read each purchase case, work the Stamp Duty from the published bands, total it with the deposit and fees, and prepare the cash-needed note for the adviser to approve.

This is general information, not financial advice. Check GOV.UK and the client's circumstances before you advise.