Stamp Duty Land Tax (SDLT) is often the biggest upfront cost after the deposit on an investment purchase, and it's easy to underestimate. Since October 2024, additional properties carry a 5% surcharge on top of the standard rates.
This guide covers England and Northern Ireland. Scotland (LBTT and the Additional Dwelling Supplement) and Wales (Land Transaction Tax) have different rates. It is general information, not tax advice; check GOV.UK and ask your solicitor or a tax adviser for your purchase.
Current rates for investors
If you already own a home, or you're buying through a company, you'll usually pay the higher rates for additional dwellings on residential property costing £40,000 or more:
| Part of the price | Standard rate | Higher rate (additional property) |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 – £1.5 million | 10% | 15% |
| Over £1.5 million | 12% | 17% |
Each rate applies only to the part of the price within that band. Non-UK residents pay a further 2% surcharge.
Worked examples
- £100,000 buy-to-let: 5% of £100,000 = £5,000
- £150,000 buy-to-let: 5% of £125,000 (£6,250) + 7% of £25,000 (£1,750) = £8,000
- £250,000 HMO: 5% of £125,000 (£6,250) + 7% of £125,000 (£8,750) = £15,000
- £400,000 property: £6,250 + £8,750 + 10% of £150,000 (£15,000) = £30,000
On a £150,000 purchase, £8,000 of stamp duty is over 5% of the price. That changes the yield and ROI shown in a deal pack, so check whether it's included.
Buying through a limited company
- Companies always pay the higher rates, even on their first property.
- A company buying a residential property for more than £500,000 can face a flat 17% rate, but property rental businesses can usually claim relief and pay the normal higher rates instead.
See our Section 24 and limited company guide for the wider pros and cons.
Situations that can change the bill
- Replacing your main home: if you're selling your main residence and buying a new one, the surcharge may not apply, or may be refundable if you sell the old home within three years.
- Six or more homes in one purchase: buying six or more dwellings in a single transaction can be treated as non-residential, which has lower rates.
- Mixed-use property: a property with a commercial element, like a shop with a flat above, usually pays non-residential rates, which are lower. HMOs on their own are residential.
- Uninhabitable property: in limited cases a property that can't be lived in may be non-residential. HMRC interprets this narrowly, so be wary of anyone promising it.
- Multiple Dwellings Relief was abolished from 1 June 2024 and can no longer be claimed.
Be cautious of "stamp duty reclaim" companies offering refunds on a no-win, no-fee basis. HMRC has challenged many of these claims, and you remain responsible for your own return.
Timing and payment
Your solicitor normally files the SDLT return and pays the tax within 14 days of completion. Make sure the money is in your completion budget — it can't usually be added to the mortgage.
Stamp duty and BMV deals
Stamp duty is charged on the price you pay, not the market value. A below-market-value purchase pays less SDLT than the full value would, but the saving is usually small compared with fees and refurbishment costs. Our guide on checking a BMV deal shows how to include stamp duty when working out the real discount.
Checklist before you offer
- Will you pay the higher rates, and has the deal pack included them?
- Are you buying personally or through a company?
- Does the property have a commercial element that could change the rates?
- Have you budgeted for stamp duty separately from your deposit and fees?