What is Stamp Duty?

Stamp Duty Land Tax (SDLT) is a tax charged by HMRC on the purchase of property or land over a certain price.

Stamp duty applies to both freehold and leasehold properties, regardless of whether you’re buying outright or with a mortgage. It is always paid by the buyer on purchase of the property, not the seller.

Stamp Duty Land Tax only applies in England and Northern Ireland; there are different taxes in Scotland and Wales.

• In Scotland, buyers pay the Land and Buildings Transaction Tax.

• In Wales, buyers pay the Land Transaction Tax.

How much is Stamp Duty?

There are varying rates of stamp duty, depending on whether you're a first time buyer, if you already own property and if you are a non-UK resident or a company.

Stamp duty is charged on a tiered basis, similar to income tax, so you only pay higher rates on the portion above the threshold.

Residential Stamp Duty

First time buyers

• Pay no SDLT up to £425,000, then 5% SDLT on the portion from £425,001 to £625,000.

Home movers (replacing your main home/residence)

• Pay no SDLT up to £250,000, then incremental increases (starting from 5% from £250,001 to £925,000).

Buy-to-let, second home owners, and limited companies

• Pay a 5% surcharge on top of residential SDLT rates.

Non-UK residents and companies

• Pay a 2% surcharge on top of residential rates (non-UK companies also must pay the 5% as above).

Non-residential (commercial) Stamp Duty

Individuals or companies buying freehold commercial property, mixed-use property or land pay:

• Zero SDLT up to £150,000

• 2% on the next £100,000

• 5% on the remaining amount

We explore Stamp Duty buy-to-let rates and thresholds in more detail later in this guide.

How do I pay stamp duty?

Once you have completed on your property purchase, you'll have 14 days from the completion date to submit an SDLT return and make payment to HMRC.

If you're using a solicitor or conveyancer, they will usually make the submission and payment on your behalf.

Why do property investors pay a stamp duty surcharge on buy-to-let properties?

In October 2024, the Chancellor announced a 5% additional rate of Stamp Duty on purchases of additional properties. This was an increase from the previous surcharge of 3%.

This was designed to target purchasers of second homes and property investors in an attempt to slow the growth of the buy-to-let market.

The 5% surcharge automatically applies to both individuals and limited companies when purchasing residential property for buy-to-let.