Everything you need to know about Stamp Duty Land Tax when buying property
Stamp Duty Land Tax (SDLT) is a tax levied by the UK government on the purchase of land and property in England and Northern Ireland. It is one of the most significant additional costs involved in buying a home or investment property, and understanding how it works is essential for any prospective buyer.
SDLT applies to both freehold and leasehold properties, whether purchased outright or with a mortgage. The tax is calculated on the purchase price of the property (or the market value if the property is transferred for less than it is worth, for example as a gift). SDLT replaced the older stamp duty system in December 2003, introducing a progressive banding structure rather than a single flat rate applied to the entire purchase price.
It is important to note that Scotland and Wales have their own separate property transaction taxes, which are covered later in this guide. If you are buying property in England or Northern Ireland, SDLT is the tax that applies to your purchase.
As of April 2025, the standard residential SDLT rates for England and Northern Ireland are as follows:
| Property Price Band | SDLT Rate |
|---|---|
| Up to £250,000 | 0% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1,500,000 | 10% |
| Over £1,500,000 | 12% |
These rates mean that you pay nothing on the first £250,000 of any residential property purchase. The 5% rate only applies to the portion of the price between £250,001 and £925,000, and so on. This progressive structure ensures that buyers of lower-value properties pay proportionally less tax.
First-time buyers benefit from a generous relief that can save thousands of pounds in stamp duty. If you qualify, the rates are substantially lower than the standard rates.
| Property Price Band | SDLT Rate |
|---|---|
| Up to £425,000 | 0% |
| £425,001 to £625,000 | 5% |
This means a first-time buyer purchasing a property for £425,000 or less pays no stamp duty at all. For a property priced at £500,000, a first-time buyer would pay just £3,750 in SDLT, compared with £12,500 under the standard rates.
To qualify for first-time buyer relief, you must meet all of the following conditions:
If you are purchasing an additional residential property — such as a second home, holiday home, or buy-to-let investment — you must pay a 3% surcharge on top of the standard SDLT rates. This applies to each band of the purchase price.
| Property Price Band | Standard Rate | Additional Property Rate |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 to £925,000 | 5% | 8% |
| £925,001 to £1,500,000 | 10% | 13% |
| Over £1,500,000 | 12% | 15% |
The surcharge applies if, after completing the purchase, you own two or more residential properties. There are some exceptions — for instance, if you are replacing your main residence and sell the previous property within 36 months, you may be able to claim a refund of the surcharge.
Stamp duty in England and Northern Ireland is calculated using a progressive or "slice" system, similar to income tax. You do not pay a single percentage on the entire purchase price. Instead, different rates apply to different portions (or bands) of the price.
| Band | Rate | Tax Due |
|---|---|---|
| First £250,000 | 0% | £0 |
| £250,001 to £450,000 (£200,000) | 5% | £10,000 |
| Total SDLT | £10,000 |
| Band | Rate | Tax Due |
|---|---|---|
| First £425,000 | 0% | £0 |
| £425,001 to £500,000 (£75,000) | 5% | £3,750 |
| Total SDLT | £3,750 |
This progressive system means that the effective rate of tax is always lower than the highest marginal rate. For example, a buyer paying £450,000 pays an effective rate of approximately 2.2%, even though the marginal rate on the top portion is 5%.
SDLT must be filed and paid within 14 days of the completion date (the date the property legally changes hands). In practice, your solicitor or conveyancer will handle the SDLT return and payment on your behalf as part of the conveyancing process.
If the SDLT return is filed late, HMRC will impose automatic penalties:
Interest is also charged on any unpaid SDLT from the filing deadline until the date of payment.
Since the devolution of certain tax powers, Scotland and Wales each operate their own property transaction taxes. These are separate from SDLT and have different rates and thresholds.
Scotland replaced stamp duty with LBTT on 1 April 2015. LBTT is administered by Revenue Scotland and has its own set of progressive bands. The nil-rate band, standard rates, and additional dwelling supplement differ from SDLT, so buyers in Scotland should use an LBTT-specific calculator and consult Revenue Scotland for the latest rates.
Wales replaced stamp duty with LTT on 1 April 2018. LTT is administered by the Welsh Revenue Authority. As with LBTT, the rates and thresholds are different from those in England and Northern Ireland. Wales also applies a higher rate for additional properties, though the surcharge percentage may differ from the English equivalent.
Shared ownership schemes allow buyers to purchase a share of a property (typically between 25% and 75%) and pay rent on the remaining share. When it comes to stamp duty, shared ownership buyers have two options:
You pay stamp duty only on the value of the share you are purchasing. However, if you later "staircase" (buy further shares), you may need to pay additional SDLT on each subsequent purchase once the total value of shares exceeds £250,000.
You can elect to pay stamp duty on the full market value of the property upfront. This means you will not pay any further SDLT when you staircase in the future. This option may be more cost-effective if you plan to eventually own the property outright, depending on the property's value and your financial circumstances.
Your solicitor can advise which option is better for your situation. First-time buyer relief may also apply to shared ownership purchases, provided the market value of the property is £625,000 or less.
Purchasing a new-build property from a developer is subject to the same SDLT rates as buying an existing home. However, there are a few points specific to new builds that buyers should be aware of.
Some developers offer stamp duty incentives — for example, they may offer to pay your stamp duty as part of a promotional deal. While this can be attractive, it is worth noting that such incentives are sometimes factored into the asking price, so always compare the overall value carefully.
With new builds purchased off-plan, the SDLT is due on the completion date (when legal title passes), not on the date you exchange contracts. This means the rate applicable is the one in force on the date of completion, which could differ if rates change between exchange and completion.
First-time buyer relief and the additional property surcharge apply to new builds in the same way as to existing properties. If your new build is part of a shared ownership scheme, the shared ownership rules above also apply.
When a residential property is purchased by a company (a "non-natural person"), different SDLT rates may apply. For properties costing more than £500,000 purchased by companies, a flat rate of 15% applies to the entire purchase price. This is significantly higher than the standard rates and is intended to discourage the use of corporate structures to avoid stamp duty.
However, there are exemptions from the 15% rate for companies that operate as property rental businesses, property developers, or property traders, provided they meet certain conditions. Companies purchasing properties below £500,000 pay the standard residential rates plus the 3% additional property surcharge.
In addition, properties held by companies (known as "enveloped dwellings") worth more than £500,000 may be subject to the Annual Tax on Enveloped Dwellings (ATED), which is a separate annual charge. Professional tax advice is strongly recommended for any company purchasing residential property.
There are several circumstances in which you may be entitled to a refund of SDLT already paid:
If you paid the 3% additional property surcharge because you bought a new home before selling your previous main residence, you can apply for a refund once the old property is sold — provided the sale completes within 36 months of the new purchase. The refund must be claimed within 12 months of the sale of the old property, or within 12 months of the filing date of the SDLT return, whichever is later.
If you believe you have overpaid SDLT — for example, because relief was not correctly applied, or the purchase price was reduced after completion — you can amend your SDLT return within 12 months of the filing date. After that period, you may need to write to HMRC to request a refund.
In some cases, buyers have successfully claimed refunds where a property was deemed uninhabitable and therefore treated as non-residential (which has different, and sometimes lower, rates). However, HMRC has contested many such claims, and the rules in this area are complex. Legal advice is recommended.
Stamp Duty Land Tax is a significant cost in the property buying process, but understanding how it works can help you plan your budget effectively. Key points to remember:
Use our free stamp duty calculator to get an instant estimate of your SDLT liability. For complex situations — such as company purchases, shared ownership, or refund claims — always seek professional advice.