Stamp Duty Land Tax: Rates, Reliefs, and How to Calculate

The Accounted Business Team·8 January 2026·6 min read

Stamp Duty Land Tax (SDLT) is one of the most significant costs involved in buying property in England and Northern Ireland. Whether you are purchasing your first home, adding to a buy-to-let portfolio, or acquiring commercial premises through a company, understanding how SDLT works can save you thousands of pounds. This guide covers the current rates, available reliefs, and the key rules you need to know.

What Is Stamp Duty Land Tax?

SDLT is a tax charged on the purchase of land and property in England and Northern Ireland. Scotland has its own equivalent called Land and Buildings Transaction Tax (LBTT), and Wales uses Land Transaction Tax (LTT). The tax applies to both freehold and leasehold purchases, whether the property is bought outright or with a mortgage.

You must file an SDLT return and pay any tax due within 14 days of completion. Late filing or payment can result in penalties and interest charges from HMRC.

Current SDLT Rates for Residential Property

SDLT is calculated on a tiered basis, meaning you only pay the higher rate on the portion of the purchase price that falls within each band. The current rates for residential property purchases in England and Northern Ireland are as follows.

The first £250,000 of the purchase price is charged at 0%. The portion from £250,001 to £925,000 is charged at 5%. The portion from £925,001 to £1,500,000 is charged at 10%. Any amount above £1,500,000 is charged at 12%.

Worked Example

If you buy a residential property for £600,000, the calculation works like this. The first £250,000 is at 0%, so no tax is due on that portion. The remaining £350,000 (from £250,001 to £600,000) is at 5%, which amounts to £17,500. Your total SDLT bill would therefore be £17,500.

First-Time Buyer Relief

First-time buyers benefit from a more generous nil-rate band. If you are purchasing your first home and the price is £625,000 or less, the first £425,000 is charged at 0% and the portion from £425,001 to £625,000 is charged at 5%.

To qualify, neither you nor anyone else you are buying with can have previously owned a property anywhere in the world. This includes inherited property and property owned abroad. If the purchase price exceeds £625,000, the relief is lost entirely and standard rates apply.

First-Time Buyer Example

A first-time buyer purchasing a property for £500,000 would pay nothing on the first £425,000 and 5% on the remaining £75,000, giving a total SDLT bill of £3,750. Under the standard rates, the same purchase would cost £12,500 in SDLT, so the relief saves £8,750.

Additional Property Surcharge

If you already own a residential property and you are buying an additional one, a surcharge of 5% applies on top of the standard rates. This applies to buy-to-let purchases, second homes, and holiday homes. The surcharge was increased from 3% to 5% from 31 October 2024.

The higher rates apply to the entire purchase price from the first pound. So for a £300,000 additional property, the calculation is: 5% on the first £250,000 (£12,500) plus 10% on the remaining £50,000 (£5,000), giving a total of £17,500.

When the Surcharge Does Not Apply

You may be able to avoid the surcharge if you are replacing your main residence. If you sell your previous main home within 36 months of purchasing the new one, you can reclaim the additional 5%. You must apply for a refund from HMRC within 12 months of the sale of your previous home, or within 12 months of the filing date of the SDLT return for the new purchase, whichever comes later.

Company Purchases of Residential Property

When a company, partnership with a corporate member, or collective investment scheme purchases a residential property for more than £500,000, a flat rate of 17% applies (15% plus the 2% non-natural persons supplement introduced in 2024). This is designed to discourage the use of corporate envelopes to avoid SDLT.

However, there are exemptions. The 17% rate does not apply if the property is acquired for a qualifying property rental business, property development or trading purpose, made available to the public, or used in connection with a trade that is open to the public (such as a hotel or care home).

For purchases at £500,000 or below, companies pay the standard residential rates plus the 5% additional property surcharge.

Non-Residential and Mixed-Use Properties

Different SDLT rates apply to non-residential property (such as shops, offices, and agricultural land) and mixed-use property (properties that combine residential and non-residential elements).

The non-residential rates are: 0% on the first £150,000, 2% on the portion from £150,001 to £250,000, and 5% on anything above £250,000.

Mixed-Use Properties

A property counts as mixed-use if it includes both residential and non-residential elements. A common example is a flat above a shop. Mixed-use properties are taxed at the non-residential rates, which are lower than residential rates. This can result in significant savings, but HMRC scrutinises mixed-use claims carefully, so the non-residential element must be genuine.

Multiple Dwellings Relief

Multiple Dwellings Relief (MDR) was abolished for transactions with an effective date on or after 1 June 2024. Before its removal, MDR allowed buyers purchasing two or more dwellings in a single transaction to calculate SDLT based on the average price per dwelling rather than the total price.

If you completed a purchase before 1 June 2024 and believe you were entitled to MDR but did not claim it, you may be able to amend your SDLT return within the normal 12-month amendment window.

Linked Transactions

Where two or more property transactions are linked (for example, they are between the same buyer and seller, or are part of the same arrangement), HMRC may treat them as a single transaction for SDLT purposes. The total consideration for all linked transactions is added together, and the SDLT rate is applied to that total. The tax is then apportioned between the transactions.

This rule is designed to prevent buyers from splitting a single purchase into multiple smaller transactions to benefit from lower SDLT bands.

How to Pay and File

You must file an SDLT return with HMRC within 14 days of completion and pay any tax due at the same time. In most cases, your solicitor or conveyancer will handle the SDLT return and payment as part of the conveyancing process. They will usually collect the SDLT from you before completion and submit the return electronically.

If you are handling the transaction yourself, you can file online through HMRC's portal or by post using form SDLT1. Late filing attracts an automatic £100 penalty, and interest is charged on any unpaid SDLT from the filing deadline.

SDLT and Lease Premiums

If you are buying a leasehold property, SDLT may apply to both the premium (the purchase price) and the net present value (NPV) of the rent payable over the life of the lease. For residential leases, SDLT on rent is charged at 1% on the NPV above £250,000. For non-residential leases, the threshold is £150,000 and the rate is 1% on the NPV from £150,001 to £5,000,000, rising to 2% above that.

Planning Ahead

SDLT is a significant transaction cost, and understanding the rules can help you structure purchases more efficiently. Consider whether first-time buyer relief applies, whether you can reclaim the additional property surcharge by selling a previous main home within 36 months, and whether the property genuinely qualifies for non-residential rates if it has mixed-use elements.

Professional advice is particularly important for company purchases, portfolio acquisitions, and any transactions involving linked parties.

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