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Do You Pay Stamp Duty When Building a New Home?

Stamp duty is a tax that has to be paid for purchasing property. However, there are various ways to either reduce your burden, or get out of paying it completely. Some people wrongly assume that they have to pay stamp duty on the full value of their home if they’re building it from scratch. That’s not the case.

You don’t have to pay stamp duty when building a new home if you already own the land. Even if you don’t, you only have to pay stamp duty on the value of the land itself, not the house you’re building on it with the help of home builders.

Can you avoid paying stamp duty for a new purchase?

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If you’re buying land to build a house on it, you won’t have to pay stamp duty on the value of the house itself. For example, if you buy a piece of land for £50,000 and build a house that costs £500,000 on it, you will only have to pay stamp duty on the £50,000.

On the other hand, if the house from the above example is already built and you purchase it along with the land, you’ll have to pay stamp duty on the full £550,000 value. This can make it more economically viable to build a new home instead of purchasing a new one.

According to the government, there are also various specific cases where you can be exempt from paying stamp duty. Those include:

  • Property deals where no money is exchanged
  • Property you’ve received through a will
  • Freehold property valued at less than £40,000
  • Property transfers related to divorce and other similar proceedings


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There are some additional exemptions that might apply to you. Refer to the official guidelines for more information.

Takaway: It is possible to not pay stamp duty on the value of the house itself if the land is already owned. There are also specific cases where people may be exempt from stamp duty, such as when no money is exchanged or the property value is less than £40,000.

Clara Annesley

Clara Annesley is an interior design and construction content writer. She holds a BSc (Hons) in Architectural Design Technology from the University of West London. Clara specialises in residential construction for topics like health & safety, architectural design and writing cost guides for renovation and remodelling projects.