Ways to Reduce Your Stamp Duty Liability When Buying a Home

Fortunately, there are legal ways to reduce your stamp duty liability. From timing your purchase to making use of available exemptions, careful planning can make a real difference.

Let’s explore the different ways to minimise this expense and keep more money in your pocket.

1. Know the Stamp Duty Thresholds

Before you buy, it’s important to understand how stamp duty works.

Stamp duty is calculated on a tiered basis. As of the latest government guidelines:

• No SDLT is paid on the first £250,000 of a property's value (or £425,000 for first-time buyers).
• From £250,001 to £925,000, it’s charged at 5%.
• From £925,001 to £1.5 million, it’s 10%.
• Anything above £1.5 million is charged at 12%.

Knowing these bands can help you estimate your liability and explore ways to stay within lower thresholds.

2. First-Time Buyer Relief

If you're buying your first home, you could be eligible for first-time buyer relief. This is one of the most common and helpful ways to reduce stamp duty.

You’ll pay no SDLT on properties up to £425,000, and only 5% on the portion between £425,001 and £625,000.

To qualify, both buyers (if a couple) must be first-time purchasers and the property must be intended as your main residence.

Tip: If your budget allows, aim to stay within the relief limit. Even just a few pounds over the £625,000 threshold could remove the benefit entirely.

3. Consider Buying a Cheaper Property

It might sound obvious, but purchasing a home just under a stamp duty threshold can save a surprising amount. For example, if your budget is around £255,000, a slight reduction in price to £250,000 could save you thousands in SDLT.

Negotiation plays a key role. Sellers might be open to a slight drop in price, especially if you’re a cash buyer or in a strong position to proceed quickly.

Use a free stamp duty tax calculator to compare how much you’d pay at different price points. A small tweak in your buying strategy could make a significant impact.

4. Transfer of Property Between Spouses or Civil Partners

Stamp duty doesn’t apply when transferring a share of a property between spouses or civil partners, either during a relationship or as part of a divorce settlement.

This can be a useful route when looking to restructure ownership to benefit from first-time buyer relief or lower thresholds in future purchases.

However, transfers between unmarried partners or other relatives will not enjoy the same exemptions, so always seek professional advice.

5. Use of Mixed-Use Property

Buying a mixed-use property—that is, one that combines residential and non-residential use—can significantly reduce your SDLT liability.

Mixed-use properties are taxed at commercial rates, which are generally lower than residential ones, and don’t carry the 3% additional surcharge for second homes.

This could include a property with a shop front and a flat above, or a house with substantial farmland or commercial buildings attached.

This route isn’t for everyone, but if you’re investing or considering a live/work property, it’s worth exploring.

6. Buying in a Company Name (With Caution)

Purchasing through a limited company might reduce your liability in certain situations, especially for portfolio landlords. However, this option comes with complexities.

There is a 3% surcharge for second properties, and corporate buyers typically pay the full SDLT rate. In some cases, a flat 15% rate may apply on homes worth over £500,000.

It can be tax-efficient in the long term due to potential savings in income and capital gains tax, but upfront SDLT charges can be steep.

Always consult a tax adviser or accountant before going down this path.

7. Claim Relief for Multiple Dwellings

If you’re buying a property that includes more than one dwelling—for example, a house with a self-contained annex—you might be eligible for Multiple Dwellings Relief (MDR).

Instead of paying SDLT based on the total purchase price, MDR lets you calculate the average price of each dwelling and apply SDLT to that figure, potentially reducing the overall tax.

This relief can be complex and HMRC scrutiny is high, so it’s best applied with the help of a solicitor experienced in property tax.

8. Transfer of Equity and Gifting Property

In certain family situations, such as gifting property or transferring equity without payment, SDLT might not apply.

However, if the recipient assumes a mortgage as part of the transfer, then SDLT may still be due on the mortgage value.

These transfers are common in inheritance planning or helping children get on the ladder. Legal and tax guidance is essential, as the rules are nuanced.

9. Avoid the 3% Second Home Surcharge

The 3% SDLT surcharge applies to second homes and buy-to-let properties.

If you’re selling your main residence and buying a new one, you might initially have to pay the surcharge if your old property hasn’t yet sold. But if you sell the previous residence within 36 months, you can claim a refund.

Make sure to keep all documentation, and apply for the refund through HMRC within 12 months of the sale.

10. Timing Your Purchase Wisely

The government has occasionally introduced temporary stamp duty holidays to stimulate the housing market.

If you’re flexible with your moving dates, timing your purchase during one of these periods could result in significant savings. While these windows are rare, they’ve been known to save buyers tens of thousands.

Stay in touch with your estate agent or solicitor for any policy updates.

Final Thoughts

Stamp Duty Land Tax can be a hefty cost, but there are plenty of legal and ethical ways to reduce your liability. Whether you’re a first-time buyer, an investor, or upsizing your family home, careful planning can lead to big savings.

Make the most of every opportunity—consider alternative property types, leverage exemptions, and use tools like a free stamp duty tax calculator to stay informed throughout your homebuying journey.

And always speak with a solicitor or tax specialist before making major decisions. The rules around SDLT are complex, and getting expert advice early on can save you money on stamp duty—and stress—later.

Looking for more home buying tips or support in navigating the property market? Get in touch with your local estate agents who understand the ins and outs of SDLT and can guide you towards a smarter purchase.