Buy-To-Let Stamp Duty

Stamp duty is charged at various rates for different buyers. Find out how much you could pay for a buy-to-let property.

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Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

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Reviewer: Jon Nixon

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Updated: December 4, 2023

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October 3, 2022

Calculating the stamp duty due on a buy-to-let property purchase isn’t always easy, as the amount you’ll pay could be different from another buyer. In this article, we’ll explain the factors involved so you can determine which rate applies to you.

How much is stamp duty on buy-to-let properties?

Stamp duty land tax (SDLT) is a property tax payable to HMRC when you buy a property in England or Northern Ireland (buyers in Scotland or Wales will instead pay Landing and Buildings Transaction Tax or Land Transaction Tax, respectively).

For residential properties, the standard rates of SDLT currently start at 0% on the first £250,000 of the property value, up to 12% on any value above £1.5 million. Here’s a table to show how the rates increase:

Portion of the property value Standard rate of SDLT
Up to £250,000 0%
£250,0001 to £925,000 5%
£925,001 to £1.5 million 10%
Over £1.5 million 12%

So, for a £2 million property, you’d pay 0% on the first £250,000, 5% on the next £675,000, 10% on the next £575,000, and 12% on the last £500,000. That’s £151,250.

There isn’t a specific rate that applies to buy-to-let purchases. However, you’ll be charged at a different rate if any of the following apply:

You currently own at least one other property

If your property purchase will result in you owning more than one property, you’ll pay a 3% SDLT surcharge. This affects the majority of buy-to-let purchases, as most investors already own their own homes. So, the applicable rates of SDLT begin at 3% up to £250,000 of the property’s value up to 15% above £1.5 million.

If you were to buy a £300,000 property and pay stamp duty at these rates, you’d pay £11,500 – that’s £9,000 more than a buyer with no other properties.

You’re not a UK resident

If you’re not a UK resident for SDLT purposes (i.e. you have spent more than 182 days outside of the UK in the 12 months before your property purchase), you’ll pay a further 2% surcharge.

So, if you’re an overseas investor AND you already own at least one other property, you’ll be charged SDLT at the following rates:

  • 5% on the first £250,000 of the property value
  • 10% on the next £675,000 of the property value (i.e. £250,001-£950,000)
  • 15% on the next £575,000 of the property value (i.e. £950,001-£1.5 million)
  • 17% on any value above £1.5 million

So, using the same example as before, if you were to buy a £300,000 second property and pay stamp duty at these rates, you’d now pay £17,500.

You’re a first-time buyer

It’s rare that first-time buyers purchase a buy-to-let but, if you do, you’ll be entitled to the same SDLT relief as any other first-time buyer. As long as you’re a UK resident, and the property is worth less than £625,000, you’ll pay:

  • 0% on the first £425,000
  • 5% on the next £200,000 (i.e. £425,001-£625,000)

Now you know how it all works and which rate applies to each threshold, use our calculator below to work out how much stamp duty could be payable on the buy-to-let property you’re looking to purchase:

When does stamp duty need to be paid?

Stamp duty is due within 14 days of completion of a property purchase. Usually, your conveyancing solicitor will do this for you and simply add it to your bill. If, for some reason, you know that your conveyancing solicitor will not pay your stamp duty, you’ll file an SDLT return with HMRC and pay the tax yourself within the 14-day time limit.

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Stamp Duty Calculator

This calculator can tell you how much Stamp Duty Land Tax you will need to pay on your property purchase, whether you're a first-time buyer, a home-mover or in the market for an investment property.

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Your stamp duty to pay is:

Your effective tax rate is

Now that you've worked out how much stamp duty is payable, it's a good idea to talk to a broker about your mortgage options. Their knowledge and expertise can help you make sure you aren't paying over the odds with all costs and fees factored in.

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How does this differ for buy-to-lets in Scotland and Wales?

In Scotland, the tax payable on property purchases is called Land and Buildings Transaction Tax (LBTT). As with stamp duty, it is charged at higher rates for additional properties.

Since this applies to almost all buy-to-lets, we’ve included both rates here:

Property value LBTT LBTT+ADS
Up to £145,000 0% 3%
£145,001-£250,000 2% 5%
£250,001-£325,000 5% 8%
£325,001-£750,000 10% 13%
Over £750,000 12% 15%

In Wales, the tax payable on property purchases is called Land Transaction Tax (LTT). Again, you’ll pay more for additional properties.

The rates are as follows:

Property value LBTT LBTT+ADS
Up to £180,000 0% 4%
£180,001-£250,000 3.5% 7.5%
£250,001-£400,000 5% 9%
£400,001-£750,000 7.5% 11.5%
£750,001-£1.5 million 10% 14%
Over £1.5 million 12% 16%

How a broker can help with stamp duty concerns

If you’re hoping to purchase a buy-to-let but you’re not sure you have enough to cover both the mortgage and stamp duty, it’s worth speaking to a broker.

They’ll provide:

  • Personalised advice. If your tax situation is complicated and you’re unsure what rate of SDLT you should pay, a broker can help you with the calculation. They’ll also help with questions about affordability and mortgage eligibility, which can depend on a range of factors including your credit score and experience as a landlord.
  • Access to high-LTV lenders. If you only have enough cash to cover stamp duty plus 15% of the property value, speaking to a broker is the best way to reach the handful of lenders who’ll consider your application.
  • Alternative ways to raise a deposit. A broker may suggest options you may not have thought about, such as a gifted deposit or raising equity from another property.

If you’d like to speak to one of the buy-to-let specialists we work with, get in touch.

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Can you add stamp duty to a buy-to-let mortgage?

Unfortunately, this is rarely a viable option. Buy-to-let lenders usually have a maximum loan-to-value (LTV) of 75-80% so you’ll need a large deposit of 20-25% of the property value. So, to buy a £300,000 property you’d need at least £60,000 in cash for the deposit and a mortgage for the remaining £240,000.

If you want to add £11,500 in stamp duty to the £240,000 loan size, you’d now need to borrow nearly 85% of the property value. Less than five lenders will currently consider applications for a loan at this LTV, making it very difficult to get approval.

Are there any stamp duty exemptions for buy-to-let?

There are no stamp duty exemptions that are specific to buy-to-let, but the same exemptions and reliefs apply as with any other purchase, including:

  • First-time buyer relief
  • Multiple dwelling relief (a way of reducing the tax payable when buying several properties in the same transaction)
  • Relief for charities (who will pay no SDLT)
  • Relief from the non-UK resident surcharge for Crown servants and their spouse or civil partner (who will then pay the same SDLT as a UK resident)

Can you claim back stamp duty for a buy-to-let?

You might hope to claim back the stamp duty paid for your buy-to-let as a business expense in your tax return. Unfortunately, this isn’t possible.

However, there are a couple of instances where you may be able to claim back stamp duty:

  • If you sell your main residence within three years of buying the buy-to-let, which then becomes the only property you own, you may be able to claim back the 3% stamp duty surcharge.
  • When you sell your buy-to-let property, you can deduct the stamp duty originally paid from the taxable gain you make from the sale. This may reduce your capital gains tax (CGT) bill.

Speak to a stamp duty specialist

Now that you have a full understanding of the stamp duty charges involved in purchasing a buy-to-let, you may be ready to apply for a mortgage. In that case, it would be smart to get in touch with a buy-to-let broker.

We work with numerous brokers who specialise in buy-to-let mortgages. If you’d like us to match you with someone with the relevant experience for your circumstances, just call us on 0808 189 2301 or fill out our online enquiry form.

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FAQs

Yes. Limited companies pay SDLT at the same rate as an individual who already owns a property. However, you might benefit from other tax savings by buying a property with an SPV (Special Purpose Vehicle). Read more in our page on buy-to-let mortgages for limited companies.

You’ll only pay SDLT on property purchases in England and Northern Ireland. For all other purchases, you should check what taxes are due in the country you’re buying in.

There’s no set definition of a main residence, but for most people it’s the home that they live in. If you’ve been renting out a property to tenants, you will not be able to claim it’s your main residence and you’ll need to pay the higher rate of SDLT for additional properties.

You won’t need to pay stamp duty when you inherit the property. However, assuming you retain ownership of the inherited property rather than selling it, you will need to pay SDLT at the higher rate for any additional properties you buy.

There isn’t a higher rate of stamp duty on buy-to-let properties, specifically. It’s a higher rate on additional properties, for anyone who already owns a home. By making it more expensive to own multiple homes, the government is supporting access to homeownership for the less wealthy.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

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Pete Mugleston

Mortgage Advisor, MD

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