Fact 17. When is stamp duty paid?

Once completion takes place, the conveyancer must arrange for the SDLT return to be submitted and the tax to be paid to HMRC within 14 days. Conveyancers calculate and arrange payment during completion.

Stamp Duty Land Tax (SDLT) is an unavoidable element of most property purchases in England and Northern Ireland. For buyers, understanding when and how it is paid is important, because this tax doesn’t just appear after completion – it must be prepared for in advance. Conveyancers play a central role in calculating the correct amount, arranging payment, and ensuring that submission deadlines are met.

This article explains when stamp duty is paid, how conveyancers handle it during the conveyancing process, what deadlines apply, and the practical details every buyer should be aware of.

What is Stamp Duty Land Tax?

Stamp Duty Land Tax, often abbreviated to SDLT, is a tax on property purchases above a certain value threshold. It applies to both freehold and leasehold transactions, whether you are buying outright or using a mortgage. When someone buys a residential property, SDLT becomes due on the purchase price exceeding the current threshold set by HM Revenue & Customs (HMRC).

The tax was introduced in 2003, replacing the older “stamp duty” system that literally involved stamping documents. Since then, SDLT has evolved with several threshold and rate changes introduced by successive governments. These rate adjustments are often used as tools to influence the housing market – for example, by reducing the burden for first-time buyers or by charging higher rates for second homes and buy-to-let properties.

When is Stamp Duty Paid?

The moment of payment is closely linked to completion. SDLT is not paid when you exchange contracts, but rather immediately upon completion of the purchase. Completion is the legal point at which ownership of the property transfers to the buyer, and the funds are released to the seller.

Once completion takes place, the conveyancer must arrange for the SDLT return to be submitted and the tax to be paid to HMRC within 14 days. This statutory deadline is strict; missing it can result in penalties and interest charges.

In practice, most conveyancers prepare all the SDLT documentation before completion so that payment can be made as soon as the transaction finalises. Buyers generally do not handle this payment directly. Instead, the conveyancer receives funds from the buyer in advance to cover the SDLT, together with the purchase money and other disbursements, and then sends payment electronically to HMRC after completion.

How Conveyancers Handle Stamp Duty

Conveyancers manage every aspect of SDLT compliance as part of the completion process. This involves several clear steps:

• Calculating the correct amount of SDLT based on the property value, buyer status (for example, first-time buyer or additional property purchaser), and any applicable reliefs.

• Preparing the SDLT return form on the HMRC system, ensuring that all property, mortgage, and buyer details are entered accurately.

• Requesting funds from the buyer prior to completion to cover the exact SDLT due, alongside legal fees and disbursements.

• Submitting the SDLT return electronically on the day of completion or immediately afterward.

• Paying the tax to HMRC directly through their secure payment channels.

• Obtaining the SDLT5 certificate, which confirms payment and submission. This certificate is then used to register the buyer as the new legal owner at HM Land Registry.

The importance of timing cannot be overstated. HM Land Registry will not register the property transfer without the SDLT5 confirmation document. This means that even though the buyer receives keys on completion day, the legal registration will be delayed if the SDLT return is not filed correctly or promptly.

How the Tax Is Calculated

The rate of SDLT depends on several factors. Conveyancers work through HMRC’s current bands to ensure that the right percentage is charged for each portion of the purchase price. The system is progressive – different bands attract different rates rather than a flat percentage on the entire sum.

As of late 2025, thresholds and rates are structured approximately as follows (rates can change with government policy):

• No SDLT on the first £250,000 for residential purchases.

• 5% SDLT on the portion from £250,001 to £925,000.

• 10% on the portion from £925,001 to £1.5 million.

• 12% on the portion above £1.5 million.

Additional property purchasers, such as buy-to-let investors or second home buyers, generally pay a 3% surcharge on top of each band. First-time buyers, on the other hand, can currently claim relief on purchases up to £425,000, with reduced rates up to £625,000.

Conveyancers use HMRC’s integrated SDLT calculator or their legal software tools to determine the exact amount payable. Any small miscalculation can delay registration or trigger compliance queries later, so this part of the process is handled precisely and double-checked before submission.

When Buyers Must Provide Funds

Buyers are usually asked to transfer all funds required for completion to their conveyancer’s client account at least one working day before the agreed completion date. This includes the purchase price, Stamp Duty Land Tax, land registry fee, and legal charges.

Because the SDLT must be paid almost immediately after completion, conveyancers need these funds in advance to ensure there is no delay. In most cases, the payment to HMRC happens the same day the transaction completes or the first working day after.

Delaying payment can lead to problems – even though the tax is legally due after completion, HMRC’s 14-day clock starts ticking the moment ownership changes hands. If the conveyancer does not make payment on time because funds were unavailable, late penalties accrue against the buyer, not the solicitor.

Buyers therefore should always respond promptly when requested to provide their SDLT amount and should allow a small margin to cover any rounding or administrative adjustments.

Stamp Duty and Apportionment Scenarios

Special rules apply in certain situations, such as mixed-use properties or transactions involving leases. Mixed-use properties that combine residential and commercial elements often attract non-residential SDLT rates, which are generally lower than residential ones. Where the property is leasehold, SDLT may apply to both the premium paid and the net present value of the rent if it exceeds specific thresholds.

If there are multiple buyers, the conveyancer must ensure correct division and declarations of ownership shares. Similarly, in cases of gifted equity or shared ownership, SDLT calculations can become more complex, requiring proportional assessment. Conveyancers dealing with these transactions verify all details carefully to ensure the right reliefs and exemptions are claimed.

What Happens If It’s Paid Late

If the SDLT payment or return is not completed within 14 calendar days after completion, HMRC may issue a fixed penalty. The current penalty structure usually includes:

• £100 if the return is up to 3 months late.

• £200 if the return is more than 3 months late.

• Additional daily interest on the unpaid tax from the due date until payment is made.

Longer delays can also attract more severe financial penalties and complicate the buyer’s land registration process. The Land Registry does not register the transfer without confirmation that HMRC has received the return. In cases where a tax return is delayed, the conveyancer may need to provide explanations, which can slow ownership verification significantly.

Proof of Payment and Registration

After payment, the conveyancer receives an SDLT5 certificate from HMRC. This document functions as proof that the return has been accepted and the amount due has been paid. The certificate includes a unique transaction reference number that corresponds with the property and buyer details submitted to HMRC.

The SDLT5 certificate is then lodged with HM Land Registry as part of the application to register the buyer as the new property owner. Registration will not proceed without it. This is why the stamp duty step is regarded as integral to completion and registration, not merely an afterthought.

Key Points for Buyers

Understanding when stamp duty is paid helps buyers avoid last-minute surprises and ensures a smooth completion.

Summary of the main facts:

• SDLT is due when the property purchase legally completes, not at exchange.

• The buyer’s conveyancer calculates the tax, submits the SDLT return, and arranges payment to HMRC.

• SDLT must be submitted and paid within 14 days of completion.

• The SDLT5 certificate is essential for registering ownership with HM Land Registry.

• Buyers should transfer their SDLT funds to their conveyancer before completion to prevent delays.

• Late submission can result in HMRC penalties and delays to land registration.

Common Buyer Questions

1. Can I pay SDLT myself?

Technically, a buyer could make their own payment, but this is strongly discouraged. HMRC’s online submission system is designed for professional users, and errors can cause registration problems later. Conveyancers handle payment as standard practice to ensure compliance.

2. What happens if I am exempt or qualify for first-time buyer relief?

Your conveyancer will calculate the correct entitlement and claim it automatically when filing the SDLT return. Reliefs never mean skipping submission entirely – even if no tax is owed, a zero-payment return must still be filed.

3. What if the purchase falls through after exchange?

You do not pay SDLT until completion. If completion does not occur, no SDLT is due.

4. How does stamp duty differ in Scotland or Wales?

Scottish and Welsh transactions follow separate systems: Land and Buildings Transaction Tax (LBTT) in Scotland and Land Transaction Tax (LTT) in Wales. Each has its own thresholds and filing requirements.

Why This Step Matters in the Conveyancing Timeline

While stamp duty might seem like a routine administrative matter, it represents a critical juncture in the conveyancing timetable. Completion cannot be finalised without advance preparation for payment, and registration cannot progress without proof of submission. For this reason, conveyancers integrate SDLT calculation, submission, and payment into their completion checklist alongside fund transfers, mortgage discharges, and registration forms.

Proper handling of SDLT ensures that the buyer becomes the legal owner without disruption, the seller receives funds promptly, and all statutory requirements are met. Buyers gain peace of mind knowing their transaction is fully compliant, safeguarding them from HMRC penalties and future registration complications.

In summary, stamp duty is paid upon completion through the conveyancer’s office. Your conveyancer not only calculates and submits the correct amount but also ensures that payment is made on time and that proof of compliance reaches HM Land Registry. Understanding this timing helps buyers plan accurately for costs, avoid late fees, and ensure a smooth transition into legal ownership.