Stamp Duty Land Tax (SDLT) is paid by the buyer of property in England and Northern Ireland on each slice of the price above a threshold: £125,000 for residential property and £150,000 for non residential or mixed property. Surcharges of 5% for additional dwellings and 2% for non UK residents can apply on top, and the buyer must file a return and pay within 14 days of completion.
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Where does SDLT apply and who pays it?
SDLT applies to purchases in England and Northern Ireland. Scotland has Land and Buildings Transaction Tax, and Wales has Land Transaction Tax for sales completed on or after 1 April 2018. The purchaser pays, not the seller.
The tax applies when you buy a freehold, buy a new or existing leasehold, buy through a shared ownership scheme, or have property transferred to you in exchange for payment, for example by taking on a mortgage or buying a share in a house. The charging provision is section 55 of the Finance Act 2003, which contains the residential and non residential rate tables.
What price is SDLT charged on?
SDLT is charged on the chargeable consideration, which is usually the price paid. It can also include goods, works or services, the release of a debt, or the transfer of a debt, including any outstanding mortgage the buyer takes over. A gift of a mortgaged property to a partner can therefore trigger SDLT even though no cash changes hands.
Transfers to a company are a common trap. Under section 53 of the Finance Act 2003, where the buyer is a company connected with the seller, the consideration is treated as at least the market value. Landlords moving a portfolio into their own company pay SDLT on market value unless a specific relief applies. The capital gains side of that move is covered in incorporation relief, and the connection test in connected persons for tax.
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What are the residential rates?
These rates apply if, after the purchase, the property is the only residential property you own.
| Portion of the price | Rate |
|---|---|
| Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% |
| £250,001 to £925,000 | 5% |
| £925,001 to £1.5 million | 10% |
| Above £1.5 million | 12% |
HMRC’s own example: a house bought for £295,000 costs £0 on the first £125,000, £2,500 on the next £125,000 and £2,250 on the final £45,000, a total of £4,750.
First time buyers
Schedule 6ZA gives relief where every buyer is a first time buyer who intends to live in the property as their only or main residence. They pay nothing up to £300,000 and 5% on the portion from £300,001 to £500,000. If the price is over £500,000 the relief is lost entirely and the normal rates apply. A first time buyer paying £500,000 pays £10,000.
New residential leases
On a new lease, SDLT is charged on the premium using the rates above. If the net present value of the rent over the life of the lease exceeds £125,000, there is also 1% on the excess. This does not apply to an assigned (existing) lease.
When do the surcharges apply?
Additional dwellings
Under Schedule 4ZA you usually pay 5% on top of every band if buying the property means you will own more than one residential property. The surcharge does not apply where the new property replaces your main residence and the old one is sold within 36 months. If the old home has not been sold by the day you complete, you pay the higher rates and can claim a refund once it is sold.
Illustration only. An investor who already owns a home buys a flat to let for £295,000. The normal SDLT is £4,750; the 5% surcharge on the whole price adds £14,750, so the total is £19,500.
Non UK residents
Schedule 9A adds a 2% surcharge for residential purchases by buyers who are not UK resident for SDLT purposes. GOV.UK explains that you are not UK resident if you were not present in the UK for at least 183 days during the 12 months before the purchase. The 2% stacks with the additional dwellings surcharge where both apply.
Companies
Certain corporate buyers, including companies and partnerships with a corporate partner, pay a flat 17% on residential property costing more than £500,000. Relief is available for property rental businesses, property developers and traders, and some other uses, if the conditions are met. Otherwise, companies buying residential property pay the 5% surcharge. Companies holding expensive dwellings may also fall within the Annual Tax on Enveloped Dwellings.
How is non residential and mixed property taxed?
Non residential property includes shops and offices, forests, agricultural property that is part of a working farm, property that is not suitable to be lived in and cannot be made suitable, and 6 or more residential properties bought in a single transaction. Mixed property has both elements, such as a flat connected to a shop or surgery.
| Portion of the price | Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 to £250,000 | 2% |
| Above £250,000 | 5% |
HMRC’s example: a freehold commercial property at £275,000 costs £2,000 on the slice from £150,001 to £250,000 and £1,250 on the final £25,000, a total of £3,250. On a new non residential lease, SDLT on the rent is added: 0% on net present value up to £150,000, 1% from £150,001 to £5 million and 2% above that.
Multiple dwellings relief has been abolished, so a bulk purchase of homes can no longer use it. A field sold with a cottage as part of its garden or grounds is taxed at residential rates, not commercial rates.
When must the return be filed and what are the penalties?
Section 76 of the Finance Act 2003 requires the purchaser to deliver a return within 14 days after the effective date of the transaction, which is normally completion. The tax is due in the same 14 days. Conveyancers usually file and pay on the day of completion and add the tax to their bill.
Schedule 10 to the Finance Act 2003 sets the penalties for a late return:
- £100 if the return is delivered within 3 months after the filing date.
- £200 in any other case.
- A further tax related penalty of up to the full amount of tax if the return is more than 12 months late.
Interest is charged on late payment. A return is still needed to claim any relief, even when no tax is due, and for most non residential purchases under £150,000.
When no return is needed
No SDLT is payable and no return is needed where no money or other payment changes hands, where property is left to you in a will, on a transfer because of divorce or dissolution of a civil partnership, or for a freehold bought for less than £40,000. Leases have their own exemptions based on length, premium and rent.
Can you get SDLT back?
A refund may be due if you paid the higher rates and then sold your previous main home, if you paid the non resident surcharge and later became UK resident for SDLT purposes, if you missed a relief, or if you paid residential rates when non residential rates applied. HMRC usually pays within 15 working days of receiving the claim.
Be cautious with firms offering to reclaim SDLT for a fee. GOV.UK states that if an agent claims for you, you remain responsible: if the claim is wrong you must repay the refund in full with interest, and penalties may follow. HMRC compliance checks can follow any return, and the time limits are explained in how far back HMRC can go.
What mistakes do buyers and advisers make?
- Assuming a gift is free of SDLT. Taking over a share of a mortgage is consideration.
- Buying before selling. Owning two homes on completion day means the 5% surcharge applies, even if the sale follows.
- Missing the £500,000 cliff for first time buyers. One pound over and the whole relief goes.
- Using price, not market value, for company transfers. Section 53 sets a market value floor.
- Labelling a property mixed use to save tax. Non residential rates only apply where the property genuinely has a non residential element, and refunds claimed on a wrong basis must be repaid.
- Forgetting the disposal side. A seller of residential property with a gain may need a 60 day Capital Gains Tax return.
If HMRC opens a check into your return, tax investigation insurance pays your accountant’s fees. Solar Protect cover pays up to £100,000 with no excess; it never pays tax, interest or penalties. Read how our cover works or get a quote.
Related Accountapedia entries
- SDLT on commercial property purchases
- The SDLT non resident surcharge
- SDLT, LBTT and LTT compared
- LBTT (Scotland) explained
- SDLT when buying several dwellings
- Reclaiming the SDLT surcharge after selling your old home
- SDLT on mixed use and non residential property
Sources
- GOV.UK: Stamp duty land tax
- GOV.UK: Residential property rates
- legislation.gov.uk: Act 2003 c. 14, section 55
- legislation.gov.uk: Act 2003 c. 14, schedule 6ZA
- legislation.gov.uk: Act 2003 c. 14, schedule 4ZA
- legislation.gov.uk: Act 2003 c. 14, schedule 9A
- GOV.UK: Stamp duty land tax corporate bodies
- GOV.UK: Nonresidential and mixed rates
- GOV.UK: Print
- legislation.gov.uk: Act 2003 c. 14, section 53
Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.