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Do I need to pay additional buy-to-let stamp duty?

SDLT when buying to let

Stamp duty on buy-to-let is a relatively new property tax on second homes. It will see you paying higher rates on top of usual stamp duty land tax (SDLT) rates, so it could make your holiday home or next investment more expensive. So although buy-to-let can still be a good investment, you should do your sums carefully.

When you buy to let, you need to take into account the costs of the additional stamp duty, which starts at 3% on top of the standard SDLT and then rises in slices. To get you started with your buy-to-let research, here’s an overview of how this tax charge works.

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What is buy-to-let stamp duty?

Stamp duty is charged on all property purchases, except to first-time buyers buying homes priced under £300,000. For other purchases it is charged in bands, as shown in the table below.

If you’re buying to let, in the vast majority of cases you’ll be buying a ‘second property’. A second property is any property you own in addition to your own home. Although it is technically possible to purchase a buy-to-let property without owning a home, in practice most lenders will be reluctant to offer a buy-to-let mortgage to a non-homeowner.

When you buy a second property, for any reason, you will be charged an additional rate of stamp duty. It’s a surcharge, so you have to pay it on top of the usual stamp duty rates.  

As with normal stamp duty, second home stamp duty is charged using a tiered system. So you pay an additional 3% on the first £125,000 and then an additional 5% for anything that falls within £125,001 to £250,000, and so on. These are the current rates:

Property price

Standard stamp duty rate

Additional buy-to-let rate

£0 - £125,000



£125,001 - £250,000



£250,001 - £925,000



£925,001 - £1.5m






You’ll also have to pay higher rates when you buy a second property in Scotland and Wales. However, Welsh stamp duty (LTT) and Scottish stamp duty (LBTT) have different rates for purchases of additional properties.

How much additional stamp duty could I end up paying?

Although 3% isn’t a huge surcharge, it can make a significant difference when applied to a property’s price. Also, bearing in mind that most properties sell at over £125,000, you will quickly find yourself entering the higher bands of additional SDLT. Here’s an example:

If you buy a second property for £230,000 you’ll have to pay 3% on the first £125,000 and then 5% on the remaining amount over £125,000.




Tax you pay

£0 - £125,000




£125,000 - £230,000







Total = 9,000

Furthermore, if your property happens to be selling at over £250,001 then you will enter an even higher band (8%) and then the surcharge can start to get seriously expensive.

The good news is that buy-to-let stamp duty can be deductible from capital gains, so at least you won’t be taxed on this money twice. Against that, tax relief on buy-to-let mortgage repayments has been phased out.

In summary, the new system of SDLT is a considerable extra expense for would-be landlords to take into account. A financial adviser can help you decide whether this kind of investment is right for you.

See our buy-to-let guide for more information.

Why do buy-to-let properties cost more in stamp duty?

The government introduced new stamp duty rules in 2015 as a way to combat the housing crisis. Rising costs of private rent along with fewer affordable homes on the market left thousands of first-time buyers unable to get on the property ladder. By making stamp duty on buy-to-let properties and second homes more expensive, the government hopes to make these investments less attractive, leaving more stock for first-time buyers. That was the theory, at least; in practice, it may simply make renting more expensive, thus making it even hard for new buyers to save up their deposit.

When do I pay buy-to-let stamp duty?

You need to file your stamp duty return with HMRC, including stamp duty on buy-to-let, within 14 days from the house purchase transaction date (usually the date you complete). Your solicitor will most likely take care of filing the return and making the payment for you, but technically it is your responsibility, so do check that your solicitor has it in hand.

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Are there any exemptions from additional stamp duty?

Second properties under £40,000 and all caravans, mobile homes and house boats are exempt from additional stamp duty.

You may also be able to get a refund if you’ve bought a second home but you’re intending to sell your current property, meaning you’ll only end up with one property. For this refund to apply, you’ll need to sell your original property within 18 months. Your mortgage broker can offer you more advice on this process.

How to avoid stamp duty on a second home

There are ways of avoiding stamp duty on second homes if you find a way to avoid having your name on the title deeds. This is possible if you’re happy for your child or other family member to own the property. You could gift them money for a deposit, get a family offset mortgage (whereby you put savings in an account that’s used as a deposit) or you could be a guarantor for their mortgage.

Bear in mind that they would legally own the house, so you need to be confident that they’ll allow to you use it as a holiday home when you want to.

If you’re a first-time buyer, you’ll also get away without paying stamp duty (as long as the agreed property price is under £300,000). So, you could buy a buy-to-let as your first property. You may find it more difficult to get a mortgage, though, but a broker can help you access the more specialist loans.

Can I avoid buy-to-let stamp duty if I...?

Whether or not you need to pay the higher rates of stamp duty depends on how many properties you own. You pay the additional rate for second properties, not your main residence (which HMRC decides based on things like where you’re registered to vote and where you work).

To help you decide if you’ll have to pay it, here are some common scenarios:

I’m buying a home but I want to let out the property

As long as it the only property you own, you won’t have to pay the higher rates of stamp duty. However, do note that if you’re a first-time buyer, you will have to pay normal stamp duty because you won’t qualify for the first-time buyer property tax exemptions if you’re letting it out.

You will also have to buy the property with a buy to let mortgage, and you may struggle to get one of these if you’re a first-time buyer. However a mortgage broker can help. Find out more about the different types of mortgage.

I’m married and my spouse doesn’t own a property

When calculating stamp duty, a married couple is treated as one person. Therefore, if one of you owns a property already, you will still have to pay additional stamp duty if you buy a second property. However, if you’re married but have been separated for some time, the rules are a little different. For example, the individual who doesn’t own a property can buy one without paying the higher rate of stamp duty, as it’s assumed that this will be their own home.

We’re not married but we’re buying a property together

If you’re part of an unmarried couple and one of you owns a property already, the only way to avoid paying the additional rates is if only one of you (the one who doesn’t yet own a home) is named on the mortgage and property deeds. However, this may not be an ideal scenario for a couple, since the one who isn’t on the mortgage would have no claim over the property, and might have to leave with nothing if the relationship breaks down.

If you’re both named on the mortgage and property deeds of the property you’re buying, and one of you already owns a property, then yes – you will have to pay the additional rates.

My main residence is abroad

If you have a property in another country and want to buy a second home in the UK, even if you have no other properties here, you’ll still have to pay the higher rates of stamp duty.

I want to buy a holiday home abroad

As long as you have one only property in the UK, you won’t have to pay the surcharge in stamp duty when you buy another property overseas.

I’ve inherited another property (or a share in one) but I already own a home

If you inherit a share in another property that is 50% or less, it won’t be considered a second home if you don’t buy another home within three years (36 months). However, if you inherit more than a 50% share, or the entire property, then it will be seen as a second property if you buy another home before you sell it.

The tax rules around inheritance are complicated, so speak to a financial adviser.

I want to buy-to-let through a limited company

Although there are several advantages to operating your buy-to-let business as a limited company, companies also have to pay the higher rates of stamp duty on additional properties. Therefore you won’t get around it that way.

Second home stamp duty refund

You may be able to get a second home stamp duty refund if you’ve already bought the property but you’re intending to sell your current home, meaning you’ll only end up with one property.

For this refund to apply, you’ll need to sell your original property within three years – to the day. If you sell even just one day after the three-year limit, you won’t be eligible.

Having said that, there are exceptions if you couldn’t sell your home for reasons outside your control. The government website lists suggests that reasons could include Covid-19 restrictions and public authority actions that prevent the sale.

You can reclaim stamp duty on your second home through HMRC. It will ask you for information about both properties and the amount you are claiming for. If all goes ok, you should get your refund in around 15 working days. Your mortgage broker can take you through this process.

If you found this article helpful you might also find our articles on consent to let mortgages and stamp duty on shares informative, too.


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About the author
Nick Green is a financial journalist writing for Unbiased.co.uk, the site that has helped over 10 million people find financial, business and legal advice. Nick has been writing professionally on money and business topics for over 15 years, and has previously written for leading accountancy firms PKF and BDO.