What is Stamp Duty Land Tax?
Stamp Duty Land Tax (SDLT) is a government tax paid when you buy property or land in England and Northern Ireland. The amount you pay depends on the property price, your circumstances, and whether you qualify for any relief or exemptions. Wales has its own Land Transaction Tax (LTT) system, while Scotland has Land and Buildings Transaction Tax (LBTT).
2025 Key Updates
First-time buyer relief continues | Multiple dwelling relief available | Non-resident surcharge at 2% | Company purchases face higher rates | Various exemptions for specific circumstances
Current Stamp Duty Rates (England & Northern Ireland)
Standard Residential Rates
| Property Value | Rate | Tax on This Portion |
|---|---|---|
| Up to £250,000 | 0% | £0 |
| £250,001 to £925,000 | 5% | Maximum £33,750 |
| £925,001 to £1,500,000 | 10% | Maximum £57,500 |
| Above £1,500,000 | 12% | 12% on excess |
Additional Property (Second Homes & Buy-to-Let)
Higher Rate Surcharge
Additional 3% surcharge applies to purchases of second homes, buy-to-let properties, and when you already own another property. This is on top of standard rates.
Standard vs Additional Property Example
£400,000 property:
Standard rate: £7,500 stamp duty
Additional property: £19,500 stamp duty (£12,000 extra)
First-time buyer: £0 stamp duty
First-Time Buyer Relief
Qualification Requirements
First-Time Buyer
Never owned property anywhere in the world, or inherited property only.
Property Value Limit
Property must cost £625,000 or less to qualify for any relief.
Joint Purchases
All buyers must qualify as first-time buyers to claim relief.
Main Residence
Property must be intended as your main residence, not investment.
First-Time Buyer Rates
| Property Value | Standard Rate | First-Time Buyer Rate |
|---|---|---|
| Up to £425,000 | 0% then 5% | 0% |
| £425,001 to £625,000 | 5% | 5% |
| Above £625,000 | Standard rates apply | No relief available |
First-Time Buyer Savings Examples
£300,000 Property
Standard buyer: £2,500 stamp duty
First-time buyer: £0 stamp duty
Saving: £2,500
£500,000 Property
Standard buyer: £12,500 stamp duty
First-time buyer: £3,750 stamp duty
Saving: £8,750
Other Stamp Duty Exemptions
Complete Exemptions
Zero Stamp Duty Scenarios
Gifts Between Spouses
Transfers between married couples or civil partners are exempt from stamp duty.
Divorce Settlements
Property transfers as part of divorce proceedings are usually exempt.
Inheritance
Properties inherited through wills or intestacy are exempt from stamp duty.
Right to Buy
Council house purchases under Right to Buy scheme are exempt from stamp duty.
Reduced Rate Exemptions
- Shared ownership: Pay stamp duty only on the share you're purchasing, not full property value
- Part-exchange: Stamp duty calculated on cash payment plus outstanding mortgage, not property value
- Compulsory purchase: Reduced rates may apply for compulsory purchase orders
- Corporate transactions: Some business restructures qualify for relief
Calculate Your Stamp Duty
Use our calculator to see exactly how much stamp duty you'll pay based on your circumstances.
Stamp Duty CalculatorMultiple Dwelling Relief
What is Multiple Dwelling Relief?
Portfolio Purchase Relief
When buying multiple properties in a single transaction, you can claim Multiple Dwelling Relief (MDR). This reduces stamp duty by averaging the price across all properties and applying a minimum rate of 1%.
How MDR Works
MDR Calculation Example
Purchase: 3 properties for £600,000 total
Average price: £200,000 per property
Standard stamp duty: 3 × £0 = £0
With MDR: Still £0 (below threshold)
Benefit: More significant on higher-value portfolios
MDR Requirements
- Same transaction: All properties must be bought at the same time
- Same vendor: Usually from the same seller or connected sellers
- Suitable properties: Must be suitable for separate occupation
- Minimum rate: Cannot reduce rate below 1% of total consideration
- Complex calculations: Professional advice recommended for optimization
Non-Resident Surcharge
Additional 2% Charge
Overseas Buyer Penalty
Non-UK residents pay an additional 2% surcharge on all residential property purchases in England and Northern Ireland. This is in addition to standard rates and any higher rate surcharge.
Who Counts as Non-Resident?
Presence Test
Must be in UK for less than 183 days in 12 months before purchase completion.
Only or Main Home
Property must become your only or main residence to avoid surcharge.
Joint Purchases
If any buyer is non-resident, the surcharge applies to entire purchase.
Company Purchases
Companies controlled by non-residents also pay the surcharge.
Non-Resident Rate Examples
| Property Value | UK Resident | Non-Resident | Additional Cost |
|---|---|---|---|
| £500,000 | £12,500 | £22,500 | £10,000 (2%) |
| £1,000,000 | £40,000 | £60,000 | £20,000 (2%) |
| £2,000,000 | £100,000 | £140,000 | £40,000 (2%) |
Legal Ways to Reduce Stamp Duty
Legitimate Planning Strategies
Timing Transactions
Sell existing property before buying to avoid additional property surcharge.
Separate Contracts
Buy land and building separately if structure allows significant savings.
Chattels Apportionment
Allocate reasonable value to fixtures and fittings, which aren't subject to stamp duty.
Shared Ownership
Consider shared ownership schemes for lower initial stamp duty liability.
Important Warnings
Artificial Avoidance
HMRC actively challenges artificial stamp duty avoidance schemes. Only use legitimate, professionally advised strategies. Penalties for tax avoidance can be severe and exceed the original tax due.
Professional Planning Areas
- Multiple dwelling relief: Complex calculations requiring specialist knowledge
- Corporate structures: Using companies for property investment with proper tax planning
- Development transactions: Planning permissions and phased development strategies
- Cross-border transactions: International tax implications and treaties
- Family transactions: Legitimate planning between family members
Wales and Scotland Differences
Wales: Land Transaction Tax (LTT)
Different Rates and Thresholds
Wales has its own system with different rates. First-time buyers can claim relief on properties up to £225,000, with partial relief to £400,000. Higher rate surcharge is 4% (not 3%).
Scotland: Land and Buildings Transaction Tax (LBTT)
Additional Dwelling Supplement (ADS)
Scotland charges a 6% Additional Dwelling Supplement on second homes and buy-to-let properties. First-time buyer relief available on properties up to £175,000.
Rate Comparison Summary
| Feature | England & NI | Wales | Scotland |
|---|---|---|---|
| Standard nil rate band | £250,000 | £225,000 | £145,000 |
| First-time buyer relief | Up to £425,000 | Up to £225,000 | Up to £175,000 |
| Additional property surcharge | 3% | 4% | 6% |
| Non-resident surcharge | 2% | None | None |
When and How to Pay
Payment Timeline
Stamp Duty Process
Completion Day
Stamp duty becomes due on the day you complete your property purchase.
14 Days to File
SDLT return must be filed with HMRC within 14 days of completion.
Payment Due
Stamp duty payment must be made within the same 14-day period.
Certificate Issued
HMRC issues stamp duty certificate needed for Land Registry registration.
Who Handles Payment
- Solicitor/conveyancer: Usually handles the entire process as part of property purchase
- Self-completion: Buyers can file returns themselves online through HMRC
- Professional advice: Complex transactions may require specialist tax advice
- Late filing penalties: £100 for late filing, plus daily penalties for extended delays
Common Mistakes to Avoid
Expensive Errors
Costly Oversights
Misunderstanding first-time buyer eligibility | Not claiming available reliefs | Incorrect classification of additional properties | Missing filing deadlines | Poor planning for multiple purchases
Planning Pitfalls
Additional Property Rules
Not understanding the 3% surcharge can add thousands to property purchases.
Joint Buyer Eligibility
All buyers must qualify for first-time buyer relief - one ineligible buyer loses relief for all.
Property Value Limits
Exceeding relief thresholds by small amounts can result in significant additional tax.
Timing Issues
Poor coordination of sales and purchases can trigger unnecessary additional property charges.
Professional Advice
When to Seek Help
Tax Specialist
Complex transactions, multiple properties, or significant stamp duty liability.
Property Lawyer
Unusual property types, development projects, or corporate purchases.
Chartered Accountant
Business property purchases or integration with broader tax planning.
Financial Advisor
Overall property investment strategy and tax-efficient structuring.
Most Purchases Are Straightforward
The majority of residential property purchases are handled efficiently by conveyancing solicitors. Professional tax advice is mainly needed for complex or high-value transactions.
Future Changes and Planning
Potential Reforms
Government Reviews
The government periodically reviews stamp duty rates and thresholds. First-time buyer relief and additional property surcharge rates may change. Non-resident surcharge could be extended or modified.
Strategic Considerations
- Rate changes: Monitor government announcements for rate changes that might affect purchase timing
- Relief expiry: Some reliefs have sunset clauses - check current availability
- Regional differences: Consider cross-border purchases between England, Wales, and Scotland
- Investment planning: Structure property investments to minimize ongoing stamp duty costs
- Portfolio growth: Plan acquisition sequences to maximize available reliefs