Stamp duty is a governmental property tax payable by residential buyers purchasing a home worth £250,000 or above and for any commercial or mixed-use property deemed non-residential and bought for £150,000 or more.
The stamp duty rates you pay depend on your circumstances, with different thresholds for first-time buyers, but apply regardless of how you purchase a property. Therefore, you will be liable for the same stamp duty charge irrespective of whether you buy a home directly, through an agent, or at a property auction.
Note that the buyer is always responsible for stamp duty obligations; the seller does not need to cover any element of this cost.
How Does Stamp Duty Work on a Property Bought at Auction?
We always reiterate that any buyer considering bidding on a property at auction, whether a first-time buyer, somebody looking to move to a large home or a property professional, should account for all auction costs and fees when deciding on their maximum bid.
Read more:Â Who pays auction fees? The buyer or the seller?
Alongside stamp duty and the final value of your bid, as a buyer, you should also think about insurance costs, financing fees (where applicable), removals, surveyor’s charges, renovations or improvements to the property, and the cost of hiring a solicitor or conveyancer to act on your behalf.
As we’ve mentioned, stamp duty (officially called Stamp Duty Land Tax) is a tax payable to HMRC, meaning the amount owed will not change based on the method you use to purchase a property.
Stamp duty in Northern Ireland is the same as in England, although the rules differ in Wales and Scotland, so you should ensure you understand the rates and thresholds if you are purchasing in another region, (except in the case of modern method auctions)
In most cases, your solicitor will deal with the stamp duty payment for you, and conveyancers who specialise in property transactions will be well-versed in the process as a standard part of completing a property acquisition.
We’ll recap the current stamp duty rates below while noting that the government has indicated that the next revision of stamp duty will be in April 2025.
Read more –Â do you need a solicitor to buy a house at auction
Current Residential Stamp Duty Rates in England
For the purposes of this guide, we’ll focus on England since most of the lots listed and bought through the experienced Clive Emson team will be within this area. The threshold above which stamp duty becomes payable on a residential property you intend to live in is £250,000.
The tax rates are progressive and depend on the total value of the transaction:
| Property Purchase Price | Stamp Duty Rate |
| Up to £250,000 | 0% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Over £1.5 million | 12% |
The different threshold for first-time buyers is £425,000 – meaning that if you purchase a residential home and have never owned a property before, you will only pay stamp duty if the property is worth £425,001 or more.
First-time buyers cannot claim stamp duty relief if they purchase a property worth over £625,000, in which case the standard tax bands above will apply.
Residential Stamp Duty Illustration
An auction buyer purchasing a home worth £500,000, who is not a first-time buyer, would pay stamp duty of:
- Value up to £250,000 = £0
- Value up to £500,000 = £12,500 (5% x £250,000)
- Total stamp duty charge = £12,500
If the buyer were purchasing their first property, they would be exempt from stamp duty on the first £425,000 and then pay a 5% rate against the £75,000 balance, with a total payable of £3,750 (£75,000 x 5%).
Paying Stamp Duty as a Second Home Buyer
If you already own an existing home, you will normally be subject to an additional 3% on top of the general stamp duty rates in our table. This surcharge does not apply if you are buying a new home to replace the property you already own and have sold the first residence.
However, if you want to buy a second property as a holiday home, investment property or buy-to-let, the extra 3% stamp duty will be payable.
For example, on the first £250,000, you will be liable to pay 3% stamp duty, followed by 8% on the valuation up to £925,000 and so on.
Second-home buyers are entitled to claim a stamp duty rebate if they subsequently sell the original property within 36 months of the purchase. If your first home has yet to sell at the purchase transaction date, you will be subject to the higher rates and need to claim a refund once the sale is completed.
Second Home Buyer Stamp Duty Illustration
In our above example, a person who is not a first-time buyer purchasing an auction property for £500,000 would attract a stamp duty charge of £12,500.
If this was their second property purchase, or they already owned a portfolio of properties, they would pay an extra 3% on each element of the valuation.
Therefore, the total charge would increase to £27,500 based on:
- Value up to £250,000 = £7,500 (3% x £250,000)
- Value up to £500,000 = £20,000 (8% x £250,000)
- Total stamp duty charge = £27,500
Stamp Duty Rates on Commercial Properties Bought at Auction
The stamp duty charges against commercial properties are different. Any building categorised as non-residential is subject to these charges, which can include:
- 100% commercial properties such as a warehouse, car park or retail shop.
- Mixed-use properties with one element that is used for commercial purposes.
- Investment properties that comprise more than six homes, or when the buyer purchases six or more residential homes in one transaction.
In most cases, a non-residential property purchase will only attract stamp duty if the acquisition is worth £150,000 or above – the rates are as follows:
| Non-Residential Property Purchase Price | Stamp Duty Rate |
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Over £250,001 | 5% |
Non-Residential Property Buyer Stamp Duty Illustration
A commercial buyer purchasing a property worth the same £500,000 as in our earlier examples would pay a total stamp duty charge of £14,500.
This figure is based on the following:
- Value up to £150,000 = £0
- Value up to £250,000 = £2,000 (2% x £100,000)
- Value up to £500,000 = £12,500 (5% x £250,000)
- Total stamp duty charge = £14,500
Further information about stamp duty charges and eligibility for second home surcharges is available through the government pages for residential and non-residential property acquisitions.
If you’re thinking of buying a property by auction, you can find out more about how a property auction works here.Â
About the Author:
Sam Kinloch
Sam’s career in the dizzy world of property auctions began when he hung up his chainsaw and headed in from the forest. Joining the team in 2003 Sam now sits on the Board of Directors and has been instrumental in the adoption of online auction services. Out of the office you can find him flying around the velodrome or sipping coffee at a local café.