When Do You Pay Stamp Duty on a New Build?

When purchasing a new build property, understanding associated costs is important. Stamp Duty Land Tax (SDLT) is a tax levied on land and property transactions, applying to new builds and pre-owned homes alike.

Understanding Stamp Duty Land Tax

SDLT applies to land and property transactions in England and Northern Ireland. The buyer is responsible for paying this tax when acquiring a freehold property, taking on a new lease, or purchasing through a shared ownership scheme. It is a self-assessed tax, meaning the buyer or their representative calculates and submits the correct amount.

This tax uses a tiered system, taxing different portions of the property’s purchase price at varying rates. The amount depends on the property’s value, whether it is a residential or non-residential purchase, and the buyer’s specific circumstances.

Calculating Stamp Duty on a New Build

The calculation of SDLT for a new build property follows the same principles as for any other residential property. The tax amount is determined by applying specific rates to different portions of the purchase price, known as tax bands. As of April 1, 2025, for residential properties:
No SDLT is payable on the first £125,000 of the property’s value.
A rate of 2% applies to the portion between £125,001 and £250,000.
5% is charged on the amount from £250,001 to £925,000.
For values between £925,001 and £1.5 million, the rate is 10%.
Any amount exceeding £1.5 million is taxed at 12%.

Specific considerations can impact the final SDLT amount. First-time buyers may qualify for a relief, meaning they pay no SDLT on properties up to £300,000, provided the property costs £500,000 or less. For properties priced between £300,001 and £500,000, first-time buyers pay 5% on the portion above £300,000. However, if the property’s cost exceeds £500,000, the first-time buyer relief does not apply, and standard rates become applicable.

Additionally, higher rates of SDLT apply to the purchase of additional residential properties, such as second homes or buy-to-let investments. This typically involves an extra 5% surcharge on top of the standard residential rates. This higher rate applies if buying the new property means an individual will own more than one residential dwelling.

When to Pay Stamp Duty

The deadline for paying Stamp Duty Land Tax is a key aspect of the property transaction. You must submit your SDLT return and pay any tax due within 14 days of the “effective date” of the transaction. The effective date is typically the completion date of the property purchase, which is when the ownership legally transfers to the buyer.

Missing this 14-day deadline can result in financial penalties and interest charges from the tax authority. Interest accrues from the day after the payment due date until the tax is fully settled. Adhering to this timeframe is important to avoid additional costs and ensure compliance.

How to Pay Stamp Duty

Paying Stamp Duty Land Tax involves submitting a return to the tax authority and remitting the calculated tax amount. Most buyers engage a solicitor or conveyancer who will handle this process on their behalf. This professional typically submits the SDLT return online and arranges for the payment as part of their conveyancing services.

If a buyer chooses to handle the submission themselves, the SDLT return can be filed online through the tax authority’s website. Payment can be made through various methods, including bank transfers such as CHAPS or Bacs, or by debit or corporate credit card. After successful submission and payment, a certificate from the tax authority confirms that the SDLT obligations for the property transaction have been met.