Understanding Stamp Duty Land Tax for Property Transactions
Stamp Duty Land Tax (SDLT) is a tax payable on most property and land purchases in England and Northern Ireland. Scotland has its own Land and Buildings Transaction Tax (LBTT) and Wales has Land Transaction Tax (LTT), but the principles are similar. SDLT must be paid and a return filed within 14 days of completion.
Residential Property Rates (from 1 October 2021, reinstated after 2022 temporary changes)
SDLT is calculated on a tiered basis — you pay each rate only on the portion of the price within each band. For residential property purchases in 2025/26: up to £250,000 — 0%; £250,001 to £925,000 — 5%; £925,001 to £1.5 million — 10%; over £1.5 million — 12%.
First-Time Buyer Relief
First-time buyers pay no SDLT on properties up to £425,000. For properties between £425,001 and £625,000, first-time buyers pay 5% on the portion above £425,000. For properties above £625,000, first-time buyer relief does not apply and standard rates are used. All buyers in the household must be first-time buyers for the relief to apply.
Additional Dwelling Surcharge
Buyers purchasing an additional residential property (a buy-to-let investment, a second home, or a holiday home) pay a 5% surcharge on top of the standard rates, as of October 2024 (increased from 3%). So for a £400,000 buy-to-let: standard rate on £150,000 at 5% = £7,500; surcharge of 5% on £400,000 = £20,000. Total SDLT: £27,500. This surcharge is waived if you sell your previous main residence within 3 years of buying the new property — you can reclaim the surcharge paid in that case.
Corporate Buyers
Companies buying residential property over £500,000 are subject to the 15% flat rate of SDLT rather than the normal bands. This is aimed at preventing individuals from holding high-value residential property in corporate structures to avoid SDLT (though the Annual Tax on Enveloped Dwellings provides a further deterrent for ongoing holding through companies).
Non-Residential Property
Commercial property (offices, retail, warehouses) and mixed-use property have separate SDLT rates: 0% up to £150,000; 2% from £150,001 to £250,000; 5% above £250,000. Mixed-use property (part residential, part commercial) benefits from the lower commercial rates.
Filing and Payment
SDLT must be paid and an SDLT return filed within 14 days of the completion date. Your conveyancing solicitor usually handles this on your behalf. Late filing attracts automatic penalties and interest on unpaid SDLT. There is no provision to extend the 14-day window.
SDLT Reliefs
Other reliefs include: multiple dwellings relief (when buying multiple properties in one transaction — though this was abolished for transactions completed on or after 1 June 2024); group relief (for intra-group transfers); charities relief; part-exchange transactions. Always check with your solicitor whether any reliefs apply to your transaction.
