Buying a rental property in England or Northern Ireland means paying Stamp Duty Land Tax (SDLT) at the standard rates, plus a 5% surcharge because the purchase leaves you owning more than one home. The surcharge applies to the whole price, starting from the first pound. A limited company pays the higher rates on any residential property of £40,000 or more, and may face a 17% flat rate above £500,000. The return must reach HMRC within 14 days.
This guide explains each of those terms, works through one example in pounds, and flags the situations that change the bill.
What Stamp Duty Land Tax is, and the surcharge on top
SDLT is the tax you pay when you buy property in England or Northern Ireland. GOV.UK explains that you pay it on increasing portions of the price, so each rate applies only to the slice of the price that falls in its band. It works like income tax bands.
The surcharge has an official name: the higher rates for additional dwellings. Most people call it the second-home surcharge or the buy-to-let surcharge. A "dwelling" is a residential property such as a house or flat.
The surcharge went up from 3% to 5% above the standard residential rates for purchases with an effective date on or after 31 October 2024. HMRC's policy paper on the change confirms this. If you find an older guide that quotes 3%, it is out of date.
The effective date is normally the date of completion, when the purchase becomes final. Contracts exchanged before 31 October 2024 can fall under transitional rules, so a purchase that was agreed long before it completed needs checking. For a purchase today, assume the 5% applies.
When the surcharge applies to a buy-to-let
HMRC's guidance on the higher rates says you pay the higher rates when you buy a residential property, or part of one, for £40,000 or more, if all of these are true:
- it will not be the only residential property worth £40,000 or more that you own, or part own, anywhere in the world
- you have not sold or given away your previous main home
- no one else has a lease on it with more than 21 years left to run
Some points catch landlords out.
Property abroad counts. The test covers property anywhere in the world, so a flat in Spain counts towards owning more than one.
Your spouse counts. If you are married or in a civil partnership, the rules apply to you both as if you were buying together, even if only one of you is named on the purchase. If either of you has to pay the higher rates, you pay them on the whole transaction, unless you are permanently separated.
Co-buyers count. When you buy with someone else, the rules apply to each buyer and their spouse. If any one of you has to pay the higher rates, the whole transaction is charged at the higher rates.
Other holdings count. HMRC says to include property owned on behalf of children under 18, and property in which you are a beneficiary of a trust. It also says to include your current home if you still own it at the end of the day you buy the new one.
Your plans for the property do not matter. The test looks at what you will own, not what you intend to do with the property. You can even owe the higher rates on a home you plan to live in, if you will still own another one.
There is one more point that surprises people. If the rental will be the only residential property you own at the end of the purchase, the higher rates do not apply. The surcharge applies to an additional property. It is not triggered by the fact that you plan to let the property out.
How the bands and the surcharge combine
The standard residential rates, from GOV.UK's residential rates page, are:
| Portion of the price | Standard rate | Higher rate (additional property) |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5 million | 10% | 15% |
| Above £1.5 million | 12% | 17% |
The higher column is simply the standard column plus 5%. The important consequence is that there is no zero band. A first-time buyer or a home mover pays nothing on the first £125,000. A landlord buying an additional property pays 5% on it.
HMRC says the higher rates are charged on everything you give for the purchase. It calls this the consideration. For most purchases, that is the price.
Worked example: a £300,000 rental
Take a landlord who already owns their own home and buys a rental flat for £300,000. HMRC's own example uses the same price. The bill works out like this:
- 5% on the first £125,000 = £6,250
- 7% on the next £125,000 (up to £250,000) = £8,750
- 10% on the final £50,000 = £5,000
The total is £20,000.
To see what the surcharge itself cost, work out the standard bill on the same price. That is 0% on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on the final £50,000 (£2,500), which comes to £5,000. The difference is £15,000, which is exactly 5% of £300,000.
That gives a quick way to estimate any bill. Work out the standard SDLT, then add 5% of the whole price. The same arithmetic across a few prices gives:
| Purchase price | Standard SDLT | Surcharge (5% of price) | Total on a buy-to-let |
|---|---|---|---|
| £200,000 | £1,500 | £10,000 | £11,500 |
| £300,000 | £5,000 | £15,000 | £20,000 |
| £500,000 | £15,000 | £25,000 | £40,000 |
These are worked from the bands above. They are for a UK-resident individual buying one additional dwelling at the rates in HMRC's guidance. Check the final figure with the official calculator before you commit.
Buying through a limited company
Buying through a limited company does not avoid the surcharge. HMRC's guidance says companies must pay the higher rates for any residential property they buy if the property is £40,000 or more, and the interest bought is not subject to a lease with more than 21 years left. There is no "first property" allowance for a company to use.
There is also a separate flat rate for companies. HMRC's policy paper says the single rate of SDLT payable by companies and other non-natural persons (bodies that are not individuals) buying dwellings over £500,000 rose from 15% to 17% for transactions on or after 31 October 2024. HMRC's higher rates guidance says the 17% rate for corporate bodies "may apply instead" of the higher rates where a property costs more than £500,000.
The word "may" matters. Whether the 17% applies to a particular company purchase depends on the company and the reliefs it can claim. HMRC says reliefs exist that reduce an SDLT bill and has a page listing them. That is a question to put to an accountant before the company signs anything. It is not a box to tick at the end.
Some other buyers are treated like companies, which is easy to miss:
- A trustee who buys for a trust that is not a bare trust, and does not give a beneficiary the right to live there for life or receive its income, is treated as a company. HMRC's example is a discretionary trust.
- A partnership that already owns a residential property pays the higher rates when it buys another. If you are a partner buying for yourself, the other partners are not pulled in unless one is your spouse. You do not pay the higher rates if your only additional properties are used for the partnership's trade.
Stamp duty is only one cost of choosing between personal and company ownership. The choice also affects income tax, Corporation Tax and the tax on an eventual sale, which is why it is worth a separate conversation. We cover moving existing rentals into a company in our guide to moving a buy-to-let portfolio into a limited company, and the ongoing paperwork in our guide to buy-to-let limited company accounts. If you are weighing a later sale, capital gains tax on a rental property is the other big number.
Situations that change the bill
Replacing your main home
This is the main way the surcharge goes away. GOV.UK says you do not pay the extra 5% if both of these apply:
- the property you are buying replaces your main residence
- your previous main residence was sold within 36 months of completing your new purchase
If you have not sold your old home on the day you complete, you pay the higher rates up front, because you own two properties on that day.
This rule is about a person's main home. It does not help a straight buy-to-let, where no main home is being replaced.
Claiming a refund
If you paid the higher rates because the old home was still unsold, you can claim back the higher-rate part once you sell. HMRC says you can apply if you sell or give away your previous main home within 3 years of buying the new one.
You cannot get a refund if you or your spouse still own any part of the previous home, or if the higher rates apply to you for another reason.
The claim has its own deadline. For sales on or after 29 October 2018, you must claim within 12 months of whichever is later: the sale of the previous main residence, or the filing date of the SDLT return for the new home. Put that date in the diary the day the old home sells.
For homes bought on or after 1 January 2017, HMRC will consider a refund where you could not sell within 3 years because of exceptional circumstances. Examples include government-imposed restrictions or action by a public authority that prevented the sale. You still have to sell once the reason has ended.
Property the higher rates do not count
HMRC says you leave these out when counting your properties:
- property worth less than £40,000
- a mixture of residential and non-residential, such as a shop with a flat above it
- moveable property like a caravan, houseboat or mobile home, unless it has become a permanent fixture
- a lease of 7 years or less on the date it was granted
- a lease owned by someone else that has more than 21 years left
There are also two transaction exceptions. Transferring a residential property to your spouse does not attract the higher rates as long as no one else is involved. Increasing your share of a property you already own is exempt if you own 25% or more, the dwelling has been your only or main home for the previous 3 years, and, for a lease extension, 21 years or more remain on the lease.
Buying six or more properties at once
Multiple Dwellings Relief was withdrawn from 1 June 2024. HMRC says that if you buy six or more properties in one transaction on or after that date, the non-residential rates apply instead of the higher rates. HMRC's guidance does not cover what happens with two to five properties in the pages we use here, so take advice before assuming the relief or the old treatment applies.
Buyers who live abroad
A buyer who is not a UK resident for SDLT pays a further 2% surcharge on residential purchases in England and Northern Ireland, on top of every other rate including the higher rates. HMRC treats you as non-resident if you were not in the UK for at least 183 days in the 12 months before the purchase.
Filing and paying
Your SDLT return must be sent to HMRC within 14 days of the effective date of the purchase. You can pay as soon as the return has been sent. HMRC's guidance for an additional residential property says to use property type code 04 on the return.
If you are an accountant or adviser checking a client's purchase, these are the questions that decide the bill:
- Who is buying, including spouses and co-buyers, and does anyone own other residential property anywhere in the world?
- Will the client still own a previous main home at the end of the day of completion?
- Is the buyer an individual, a company, a partnership or a trust, and if it is a trust, what type?
- Is the price above £500,000 and the buyer a company?
- Is the property mixed-use, a lease, or one of several bought together?
The 14-day deadline is short, and the dates are easy to lose track of if the solicitor and the client each assume the other is handling the return. Agree at the outset who will check and file.
Scotland and Wales
SDLT covers England and Northern Ireland only. Scotland charges Land and Buildings Transaction Tax (LBTT) and Wales charges Land Transaction Tax (LTT). Each has its own rates and its own extra charge for additional dwellings, so the figures in this guide will not match. For a purchase in either country, use that country's calculator and guidance, and do not apply the SDLT table above.
For England and Northern Ireland, GOV.UK has an official SDLT calculator, and HMRC's Stamp Duty Land Tax manual covers definitions such as what counts as a dwelling and a main residence. Rates change, and the pages we have used were last updated on 1 April 2025, so run the numbers through the calculator for your completion date.
If you let property, our property page covers the accounts, tax and Making Tax Digital side of being a landlord.
Frequently Asked Questions
Is the buy-to-let stamp duty surcharge 3% or 5%?
It is 5% for purchases with an effective date on or after 31 October 2024. It was 3% before then. Contracts exchanged before 31 October 2024 can fall under transitional rules.
Do I pay the surcharge if the rental is my first property?
If the rental will be the only residential property worth £40,000 or more that you own anywhere in the world, and you are not buying with a spouse or co-buyer who owns another, the higher rates do not apply. Check the property held by your spouse, co-buyers and any you hold through a trust or for children under 18.
Does the surcharge apply to properties under £40,000?
No. The higher rates apply to a residential property bought for £40,000 or more. At or above that price, they apply to the whole price.
Does a limited company pay the surcharge?
Yes. A company pays the higher rates on any residential property it buys for £40,000 or more, unless the interest is subject to a lease with more than 21 years left. Above £500,000, the 17% rate for companies may apply instead, so take advice on the specific purchase.
Can I get the surcharge refunded on a buy-to-let?
Only in one situation: you paid the higher rates because you bought a new main home before selling the old one, and you then sell the old one within 3 years. A pure buy-to-let purchase with no main home being replaced does not qualify. The claim must be made within 12 months of the later of the sale or the filing date of the new SDLT return.