Stamp Duty on UK Property

Here we explain what Stamp Duty Land tax is, and how it affects investors with an interest in UK buy to let property.

(First published in 2021 but updated in 2023.)

What is Stamp Duty Land Tax?

Purchasers must pay Stamp Duty Land Tax (SDLT) when buying a property or land over a certain price in England and Northern Ireland. (Different taxes apply in Scotland and Wales.)

Stamp Duty is applied to residential and commercial property at varying rates. The obligation also varies based on an individual’s circumstances.

How do I pay Stamp Duty?

Buyers must appoint a solicitor to purchase their property. The solicitor usually calculates the amount of Stamp Duty owed and outlines what needs to be paid.

The amount is paid on your behalf on the day of completion and add the amount to their fees.

When do I pay Stamp Duty?

Purchasers must pay the tax within 14 days of completion.

UK Stamp Duty Rates

Stamp Duty Land Tax (SDLT) is payable in different amounts above certain thresholds. The UK Government notes that if you buy a property for less than the threshold, there’s no SDLT to pay. The current SDLT thresholds, introduced in September 2022, are:

  • £250,000 for residential properties
  • £425,000 for first-time buyers buying a residential property worth £625,000 or less
  • £150,000 for non-residential land and properties

However, landlords must pay a +3% surcharge on any property worth more than £40,000. Consequently, the effective rates for investors are as follows:

  • Up to £250,000: 3%
  • £250,001-£925,000: 8%
  • £925,001-£1.5m: 13%
  • Over £1.5m: 15%

FAQs: Get your Stamp Duty Land Tax questions answered

It is best to get independent advice from a trusted mortgage broker. However, it is possible to borrow more money to cover SDLT and use a deposit to pay the tax.

You will need to consider whether the additional interest payment on top of the amount you have borrowed is the best strategy for your purchase.

If you already own a property, you will need to pay the higher rate for second homeowners or buy to let investors.

In short, no. All investors should calculate Stamp Duty into their purchase cost.

If you are buying through a Limited Company Structure, it is best to obtain professional financial advice.