How much Stamp Duty do I pay on a buy-to-let property?
If you buy an additional or investment property, you will need to pay a 3% Stamp Duty Surcharge. Here's what you need to know.
What is Stamp Duty Land Tax (SDLT)?
Stamp Duty Land Tax (SDLT) is a tax payable to HMRC on property and land purchases. Unless you are a first-time buyer meeting certain criteria, you must pay SDLT when you buy a residential property in England or Northern Ireland for over £125,000.
In Scotland, you pay Land and Buildings Transaction Tax, and in Wales Land Transaction Tax.
Higher Stamp Duty rates for second homes and additional properties
In April 2016, the Government introduced a Stamp Duty surcharge on additional homes, whether they are purchased as a buy-to-let investment or for any other reason.
If you purchase a buy to let property, you will have to pay a 3% surcharge in addition to the standard SDLT rate.
The surcharge applies to any property purchased in England, Wales or Northern Ireland that is not the buyer’s main residence.
How much Stamp Duty will I have to pay on a second home or additional property?
SDLT rates on second homes (including the 3% surcharge) are as follows:
| Stamp Duty bracket | Standard SDLT % rate |
Additional Property SDLT % rate |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| The next £250,001 - £925,000 | 5% | 8% |
| The next £925,001 - £1.5m | 10% | 13% |
| The amount over £1.5m | 12% | 15% |
Example 1:
If you purchase a buy-to-let property for £600,000 you would pay £35,500 SDLT, calculated as follows:
- 3% on the first £250,000 (£7,500)
- 8% on the next £350,000 (£28,000)
Example 2
If you purchase a buy-to-let property for £1.2m you would pay £97,250 SDLT, calculated as follows:
- 3% on the first £250,000 (£7,500)
- 8% on the next £675,000 (£54,000)
- 13% on the next £275,000 (£35,750)
Who has to pay the Stamp Duty surcharge?
The 3% surcharge does not only affect landlords purchasing a buy to let property. Anyone buying a property in addition to their main residence will have to pay the surcharge.
The surcharge would still be payable in the following circumstances:
- A parent buying a home for their child unless the property is to be registered in their child’s name only or in a trust.
- A married couple who own a property in one name only then buys a second property in the other spouse’s name.
- Anyone who owns a property abroad, who subsequently buys a home in England, Wales or Northern Ireland.
- If you are selling your home: buying a second property before the first has sold. The additional Stamp Duty you paid while owning two properties can be claimed back if you sell your original home within three years.
Are any properties exempt?
Yes. There is no Stamp Duty surcharge on the following types of property:
- Caravans and mobile homes
- Houseboats
- Property purchased for under £40,000
See also:
