Work out exactly how much stamp duty you'll pay on your next investment property. Factor the 5% surcharge into your yield calculations from the start.
The additional property surcharge adds 5% on top of standard rates for buy-to-let and investment property purchases.
Main residence purchase
Standard + 5% surcharge
The surcharge applies to all buy-to-let purchases where you already own a residential property.
Main residence vs buy-to-let
Common questions about stamp duty for property investors and buy-to-let landlords.
A 5% surcharge applies on top of standard rates for second homes and buy-to-lets.
If you are buying an additional residential property — such as a buy-to-let, second home, or holiday let — you must pay a 5% surcharge on top of the standard SDLT rates across every band. This surcharge was increased from 3% to 5% on 31 October 2024.
| Purchase price band | Standard rate | Additional property |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 – £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
On a £300,000 additional property, you would pay £20,000 in SDLT compared to just £5,000 as a standard buyer. The surcharge does not apply to properties purchased for less than £40,000.
The surcharge increases your acquisition cost, reducing your net yield in the early years.
The additional property surcharge increases your total acquisition cost, which in turn reduces your yield when calculated against the total capital invested. For example, on a £300,000 buy-to-let property you would pay £20,000 in SDLT — if the annual rent is £18,000 (6% gross yield on purchase price), the effective yield drops to 5.6% when SDLT is included in the investment cost.
It is essential to factor stamp duty into your cash-flow projections from the outset, especially when comparing returns across different investment strategies.
Companies always pay the surcharge — the tax savings come from other areas.
Purchasing through a limited company does not reduce stamp duty — in fact, the 5% additional property surcharge always applies to company purchases of residential property, regardless of whether the company already owns other properties.
The potential benefits of a limited company structure lie in income tax and capital gains tax treatment, not stamp duty. Corporation tax rates on rental profits and the ability to offset mortgage interest as a business expense can make a significant difference, especially for higher-rate taxpayers. Consult a property tax specialist to evaluate which structure suits your circumstances.
Yes — if you sell your previous main home within 36 months of buying a new one.
If you buy a new main residence before selling your existing one, you will initially pay the higher rate. You can claim a refund of the surcharge if you sell your previous main home within 36 months of the new purchase.
The refund claim must be made within 12 months of the sale of your old property, or within 12 months of the filing date for the new purchase — whichever comes later.
This does not apply to genuine additional properties such as buy-to-lets or second homes.
Rates reverted to pre-2022 levels from 1 April 2025, with a nil-rate band of £125,000.
From 1 April 2025, the SDLT thresholds reverted to their pre-September 2022 levels. Here are the current standard residential rates for England and Northern Ireland:
| Purchase price band | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 – £250,000 | 2% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1,500,000 | 10% |
| Over £1,500,000 | 12% |
First-time buyers pay 0% on the first £300,000 and 5% on £300,001 to £500,000, provided the property costs £500,000 or less.
Within 14 days of completion — your solicitor usually handles this.
You must file an SDLT return and pay any stamp duty owed within 14 days of completion in England and Northern Ireland. In Scotland and Wales, the deadline is 30 days.
Your solicitor or conveyancer will typically handle this on your behalf, and most will request the funds before completion. Late filing or payment can result in penalties and interest charges from HMRC.
This applies whether you are purchasing as an individual or through a limited company.
Technically yes, but it increases your borrowing costs significantly over time.
You can increase your mortgage to cover stamp duty by borrowing more and using the freed-up deposit funds to pay SDLT. However, over a 25-year term at 5%, that extra borrowing will cost roughly 80% more in interest.
It can also push your loan-to-value ratio into a less competitive bracket. For buy-to-let investors, a larger mortgage may mean your rental income no longer meets lender coverage requirements.
Where possible, paying stamp duty from savings is the more cost-effective approach.
Companies always pay the additional property surcharge on residential property.
When purchasing residential property through a limited company, the additional property surcharge always applies — regardless of whether the company already owns other properties. This means you pay an extra 5% on top of standard rates from the first pound.
Company purchases can benefit from different treatment on mixed-use or commercial properties, and the rules around portfolio structuring can be nuanced. The filing obligations and payment deadlines are the same as for individual purchasers.
Consult a property tax specialist to find the most efficient structure for your investments.
How the additional property surcharge impacts your investment returns, and what you need to know before buying.
The 5% additional property surcharge significantly increases your total acquisition cost. On a £300,000 buy-to-let you would pay £20,000 in SDLT, compared to just £5,000 for a main residence at the same price. If your annual rent is £18,000 (6% gross yield), including the SDLT in your capital outlay reduces the effective yield to around 5.6%.
Factor stamp duty into your cash-flow projections from the outset. The higher the surcharge, the longer it takes for rental income to recoup the upfront tax cost.
Many investors purchase buy-to-let properties through a limited company (SPV) for income tax benefits. However, buying through a company does not reduce stamp duty — the 5% additional property surcharge always applies to company purchases of residential property, regardless of whether the company already owns other properties.
The potential advantages of a limited company structure lie in how rental profits are taxed (corporation tax vs income tax) and the ability to offset mortgage interest as a business expense. Consult a property tax specialist to evaluate which structure is right for your situation.
If you've never owned property and your first purchase is a buy-to-let, you won't pay the additional property surcharge because you don't already own a main residence. However, you won't qualify for first-time buyer relief either — you'll pay standard SDLT rates.
This makes the first buy-to-let purchase significantly cheaper in stamp duty terms than subsequent ones, where the 5% surcharge will apply.