Do You Need To Pay Stamp Duty On A New Build?

Purchasing a property is always an exciting venture, and buying a new build adds an extra element to this process. New builds are often a great choice, as they come brand new with completely fresh fixtures and fittings.

The allure of these brand-new properties with their modern standards is clear to see, but if you’re considering buying one, or are already in the process of doing so, it’s essential you fully understand all of the financial implications of this kind of purchase.

Alongside organising your mortgage, the deposit and all of the other associated costs of buying a house, stamp duty is another payment you may need to make.

We’ve put together a comprehensive guide that will delve into what stamp duty is, the current rates and how it is applied to new build properties.

Read on to find out more…

What Is Stamp Duty?

Stamp duty land tax (SDLT), commonly just referred to as stamp duty, is a tax imposed by the UK government on the purchase of property or land over a certain value in England and Northern Ireland. Scotland and Wales have their own versions of the tax but it comes under a different system and is applied slightly differently.

Stamp duty has existed in some form in the country since the late 1600s, and it was initially introduced to raise revenue from property transactions. The amount you are charged varies based on the price of the property you are buying.

Stamp duty applies whether you are buying a freehold or leasehold property and is always paid by the buyer rather than the seller. The tax is structured in a progressive way, and as well as the property value, the amount you pay also depends on whether it is a residential property, a second-home or a buy-to-let property. Stamp duty can significantly impact the cost of your home, so it’s vital to factor it into your budget.

What Is The Current Stamp Duty Rate?

For the purposes of this article, we’ll look at stamp duty in the context of purchasing a residential property. Stamp duty rates changed on 1st April 2025, and the updated rates are as follows:

Properties up to £125,000: 0%
Properties between £125,001 and £250,000: 2%
Properties between £250,001 and £925,000: 5%
Properties between £925,001 and £1.5 million: 10%
Properties above £1.5 million: 12%

These rates have been shifted from the previous threshold, where the 0% band extended up to £250,000 properties. This change means that more properties will now be required to pay some kind of stamp duty.

Do You Pay Stamp Duty On A New Build?

Yes, stamp duty applies to new build properties just as it does to existing homes. The tax is levied based on the purchase price of the property, regardless of whether it has been newly constructed or previously owned. Therefore, when purchasing a new build, you should always factor in stamp duty costs as part of your budget.

Sometimes, developers are known to pay stamp duty on their developments, but you should always check this information carefully.

How Is Stamp Duty Calculated On New Builds?

Calculating stamp duty on new build properties uses the same price bands as existing homes, but the calculation itself is sometimes a bit different.

This is because stamp duty is calculated based on:

Property price: The total amount you’re paying for the property
Additional costs: If optional extras like fixtures and fittings have been installed in the property and paid for by you.

Often, people will pay for the installation of kitchens or other furnishings separately, and this can sometimes push your sale into higher stamp duty bands. For instance, if the property costs less than £250,000, the cost of these extras may see you exceed this threshold, which means you fall into a higher stamp duty band. You should seek clarity when buying a new build property on what is and isn’t included in the property price to ensure you don’t unexpectedly need to pay more stamp duty.

Ways To Avoid Paying Stamp Duty On New Builds

While stamp duty is a standard part of most property purchases, there are sometimes a few circumstances where you may be able to avoid it:

If a property has been left in a will: This is unlikely to be the case for new builds, but if properties are transferred in a will, no stamp duty is required.
Purchase a property less than £125,000: If the property is less than £125,000, then no stamp duty is paid. Bear in mind that new build properties tend to be more expensive than existing ones.
Negotiate with the developer: In some instances, you may be able to negotiate directly with the developer to ensure your purchase falls into a lower stamp duty band.
First-time buyers: If you’re a first-time buyer, the stamp duty rates differ and you will be more likely to avoid it.

Do You Have To Pay Stamp Duty As A First-time Buyer?

In some instances, you will need to still pay stamp duty as a first-time buyer but the rates are different.

For example, for first-time buyers, stamp duty does not begin until a property purchase exceeds £300,00. The full rates for first-time buyers are as follows:

No stamp duty up to £300,000
5% stamp duty on portions between £300,001 and £500,000
Standard stamp duty rates apply to all properties above the cost of £500,000

What Happens If I Don’t Pay My Stamp Duty Bill?

Once your property purchase has been completed, you have 14 days to pay your stamp duty bill. Failure to do so will see you receive a fine from HMRC.

Understanding stamp duty rules is crucial when it comes to purchasing new build properties. With changes occurring in April 2025, it’s more important than ever to be aware of the rates and how they may affect your next purchase.