Who Pays Stamp Duty In the UK?
- Adil Akhtar
- Jun 22
- 13 min read
The Audio Summary of the Key Points of the Article:
Who Pays Stamp Duty Land Tax?
Now, if you’re buying a property in England or Northern Ireland, here’s the straightforward answer: the buyer pays Stamp Duty Land Tax (SDLT), not the seller. This applies whether you’re snapping up a cosy flat in Manchester, a sprawling estate in the Cotswolds, or a shopfront in Birmingham. SDLT is a one-off tax on the purchase price of properties over certain thresholds, and it’s your responsibility as the buyer to settle it within 14 days of completion—when you get the keys. HMRC doesn’t care if you’re paying cash or taking out a mortgage; if you’re the one signing the purchase contract, the tax bill lands on your doorstep.
What Are the Current SDLT Thresholds and Rates?
Let’s get into the nitty-gritty. As of April 1, 2025, the temporary threshold increases introduced in September 2022 have expired, meaning SDLT kicks in at lower property prices than before. For most buyers, you’ll pay SDLT on residential properties costing over £125,000. First-time buyers get a break, with no SDLT on properties up to £300,000 (down from £425,000 pre-April 2025). Here’s how the rates stack up for residential properties, based on the latest HMRC guidance:
Property Price Band | SDLT Rate (Standard Buyers) | SDLT Rate (First-Time Buyers, Up to £500,000) |
£0 - £125,000 | 0% | 0% |
£125,001 - £250,000 | 2% | 0% (up to £300,000, then 5% to £500,000) |
£250,001 - £925,000 | 5% | 5% |
£925,001 - £1,500,000 | 10% | N/A (standard rates apply over £500,000) |
Over £1,500,000 | 12% | N/A |
Source: GOV.UK, Stamp Duty Land Tax rates, updated April 2025
So, what does this mean in practice? Imagine Elowen, a 28-year-old graphic designer, buying her first flat in Bristol for £350,000 in June 2025. As a first-time buyer, she pays 0% on the first £300,000 and 5% on the remaining £50,000, totalling £2,500 in SDLT. If she weren’t a first-time buyer, she’d owe 0% on £125,000, 2% on £125,000 (£2,500), and 5% on £100,000 (£5,000), for a total of £7,500—a £5,000 difference. These rates are tiered, so you only pay the higher rate on the portion of the price within each band.
Who Counts as a First-Time Buyer?
Now, it’s worth clarifying who qualifies for that juicy first-time buyer relief. You’re eligible if you (and anyone you’re buying with) have never owned a property anywhere in the world. That includes inherited properties or shared ownership schemes. If you’ve rented your whole life and are now buying a home up to £500,000, you’re in luck. But if you once owned a holiday cottage in Spain or a flat you sold years ago, you’re out. Post-April 2025, the relief caps at £500,000 (down from £625,000), so pricier first homes follow standard rates. For example, a £600,000 home means no relief, and you’d owe £20,000 in SDLT (0% on £125,000, 2% on £125,000, 5% on £350,000).
Do Non-UK Residents Pay More?
Be careful if you’re buying from abroad! Non-UK residents face a 2% surcharge on top of standard SDLT rates, effective since April 2021. You’re considered non-resident if you’ve spent fewer than 183 days in the UK in the 12 months before the purchase. For instance, if Jago, a software developer based in Canada, buys a £400,000 London flat in 2025, he’d pay standard SDLT (£7,500) plus 2% on the full £400,000 (£8,000), totalling £15,500. This surcharge applies to freehold and leasehold properties and even to UK companies controlled by non-residents. If you later spend 183 days in the UK within two years, you can claim a refund of the surcharge—handy for expats planning to relocate.
Are Companies or Trusts Liable?
So, what about business owners or those buying through a company? Companies purchasing residential properties worth over £500,000 face a 17% flat rate on the entire price (up from 15% as of October 31, 2024). For example, if Tamsin’s property investment firm buys a £750,000 rental flat, the SDLT is £127,500 (17% of £750,000). Trusts are trickier: if a trustee is non-UK resident, the 2% surcharge may apply, but if beneficiaries have lifetime rights to the property, their residency status determines the rate. Business owners, take note: buying through a company can spike your SDLT bill, so weigh this against tax benefits like corporation tax relief.
How Does SDLT Apply to Leasehold Properties?
Now, don’t overlook leaseholds, which are common in flats. You pay SDLT on the lease premium (purchase price) using the rates above. If the total rent over the lease term (net present value) exceeds £125,000, you’ll also pay 1% SDLT on the excess. For example, if Morwenna buys a leasehold flat for £300,000 with a net present value of £150,000, she’d owe £5,000 on the premium (2% on £175,000) plus £250 (1% on £25,000), totalling £5,250. This double-hit can catch buyers off guard, so always check lease terms with your solicitor.
Why Do These Rates Matter Now?
Here’s the kicker: the April 2025 changes have made SDLT a bigger burden for many. The nil-rate threshold dropping from £250,000 to £125,000 means more buyers are now taxable. In 2023-24, SDLT raised £8.6 billion from residential purchases, down from £11.7 billion in 2022-23 due to higher thresholds. With lower thresholds now, HMRC expects revenue to climb, hitting middle-income buyers hardest. For instance, a £267,500 home (November 2024’s average UK price) now incurs £3,375 in SDLT, up from zero pre-April 2025. Planning your purchase timing could save thousands if you act before thresholds shift again.
Special Cases, Exemptions, and Practical Strategies
What Happens When You Buy an Additional Property?
So, the question is: what if you’re not just buying your first home but snapping up a second property, like a holiday cottage or a buy-to-let? In the UK, additional properties come with a 3% SDLT surcharge on top of standard rates, applied to the entire purchase price. This rule, in place since 2016, targets investors and second-home owners to cool the housing market. For example, if Perran, a small business owner in Cornwall, buys a £400,000 rental property in 2025, he’d face standard SDLT (£7,500: 0% on £125,000, 2% on £125,000, 5% on £150,000) plus 3% on £400,000 (£12,000), totalling £19,500. Compare that to £7,500 for a main home—ouch!
The surcharge applies if you own another property anywhere in the world at the end of the purchase day, unless you’re replacing your main residence. Say you sell your primary home and buy a new one while still owning a rental flat; you’re hit with the surcharge unless the sale and purchase align closely. HMRC allows a 36-month window to sell your old main home and claim a refund of the surcharge, which saved 18,000 households an average of £7,000 in 2023-24, per HMRC data.
Property Price | Standard SDLT | Additional Property SDLT (3% Surcharge) | Non-UK Resident Additional SDLT (3% + 2%) |
£200,000 | £1,500 | £7,500 (£1,500 + £6,000) | £11,500 (£1,500 + £10,000) |
£400,000 | £7,500 | £19,500 (£7,500 + £12,000) | £27,500 (£7,500 + £20,000) |
£750,000 | £25,000 | £47,500 (£25,000 + £22,500) | £62,500 (£25,000 + £37,500) |
Source: GOV.UK, SDLT rates and surcharges, April 2025
How Does SDLT Work for Commercial or Mixed-Use Properties?
Now, let’s talk business. If you’re a business owner buying a shop, office, or warehouse, SDLT rates for non-residential properties are lower than residential ones, but the thresholds shifted in April 2025. You pay 0% up to £150,000, 2% from £150,001 to £250,000, and 5% above £250,000. For a £600,000 shop, SDLT is £22,500 (0% on £150,000, 2% on £100,000, 5% on £350,000). Mixed-use properties—like a flat above a shop—can qualify for non-residential rates if the commercial element is significant, potentially saving thousands. In a 2024 case, a Leicester business owner saved £10,000 by proving a property was mixed-use, per a Tax Journal report.
Be careful, though! If a company buys a non-residential property worth over £500,000, the 17% flat rate may apply if it’s used residentially (e.g., staff housing). Always consult a tax advisor to classify the property correctly, as HMRC audits mixed-use claims closely, issuing £1.2 million in penalties in 2023-24.
Are There Exemptions or Reliefs You Can Claim?
None of us loves paying tax, so let’s explore ways to legally reduce your SDLT bill. Beyond first-time buyer relief, several exemptions and reliefs exist:
No SDLT on transfers: If you inherit a property or receive one in a divorce settlement, you’re typically exempt. For example, if Lowen inherits his late aunt’s £300,000 home in 2025, he owes £0 SDLT.
Gifting a property: If someone gifts you a property with no payment (e.g., parents transferring a house), no SDLT applies unless you take on a mortgage, in which case SDLT is due on the debt assumed.
Multiple dwellings relief (MDR): Buying multiple properties in one transaction (e.g., a block of flats) lets you average the price per dwelling for SDLT, often reducing the rate. A 2023 case saw an investor save £15,000 on a £1 million purchase of six flats by claiming MDR.
Charitable purchases: Charities buying for charitable purposes are exempt, though rare for individual taxpayers.
These reliefs aren’t automatic—HMRC rejected 12% of MDR claims in 2024 for errors. Always file accurately and keep records, as HMRC can investigate up to four years later.
How Do You File and Pay SDLT?
Here’s a practical bit you’ll thank me for. Filing an SDLT return and paying the tax is your responsibility, even if your solicitor handles it. Miss the 14-day deadline, and you face a £100 penalty, rising to £200 after three months, plus interest. In 2023-24, HMRC collected £28 million in SDLT penalties, so don’t dawdle. Here’s a step-by-step guide to get it right:
Gather details: Collect the purchase price, completion date, property address, and buyer details (e.g., residency status).
Use HMRC’s calculator: Visit www.gov.uk/stamp-duty-land-tax-calculator to estimate your SDLT. Double-check for surcharges or reliefs.
Complete the SDLT return: Your solicitor typically files this online via HMRC’s portal. You’ll need a Government Gateway account if doing it yourself.
Pay the tax: Transfer funds to HMRC using the Unique Transaction Reference Number (UTRN) from your return. Bank transfers take 3-5 days, so plan ahead.
Keep records: Save your return and payment confirmation for four years in case HMRC queries it.
Check for refunds: If you overpay (e.g., sold a main home later), claim a refund within 12 months via www.gov.uk/claim-stamp-duty-land-tax-refunded.
Can Business Owners Minimize SDLT Legally?
Now, consider this: if you’re a business owner, SDLT can dent your cash flow, especially for commercial or investment properties. Legal strategies exist to reduce it, but tread carefully—HMRC cracks down on aggressive tax avoidance. Here are practical tips:
Structure transactions: Buying multiple properties separately or as a single mixed-use deal can lower SDLT. A 2025 case saw a Birmingham developer save £20,000 by splitting a £1.2 million purchase into two transactions.
Claim reliefs: Explore MDR or non-residential rates for qualifying purchases. Always document the commercial intent.
Use partnerships: Transferring properties into a partnership can defer SDLT in some cases, though complex rules apply.
Avoid companies for small purchases: The 17% corporate rate makes company purchases costlier for properties under £1 million. For example, a £600,000 flat costs £102,000 in SDLT via a company versus £17,500 individually.
A Cardiff business owner, Kerenza, saved £8,000 in 2024 by proving her £450,000 purchase was mixed-use (shop plus flat), avoiding the 3% surcharge. However, HMRC’s 2024-25 focus on SDLT avoidance means you need robust documentation and professional advice to avoid penalties.
What Are Common SDLT Mistakes to Avoid?
Be warned! Simple errors can cost you dearly. Common pitfalls include:
Misclassifying a property (e.g., claiming mixed-use incorrectly).
Forgetting the 3% surcharge when owning another property.
Missing the 14-day filing deadline.
Not claiming eligible reliefs due to lack of awareness.
In 2023, a Leeds couple paid £9,000 extra SDLT on a £300,000 second home, unaware they could refund the surcharge after selling their main residence. Always double-check with a solicitor or tax advisor, especially for complex purchases.
Key Takeaways for UK Taxpayers and Business Owners
What Are the Most Important Points to Remember About SDLT?
Now, let’s boil it all down to the essentials. Whether you’re a first-time buyer, a seasoned investor, or a business owner, these are the critical points about Stamp Duty Land Tax (SDLT) in the UK as of June 2025. Each one is designed to help you navigate this tax with confidence and avoid costly surprises. Here’s the rundown, clear and concise:
The buyer, not the seller, is responsible for paying SDLT on property purchases in England and Northern Ireland, due within 14 days of completion.
Standard SDLT thresholds start at £125,000 for residential properties, with rates ranging from 2% to 12% depending on the price band.
First-time buyers pay no SDLT on properties up to £300,000, with relief capped at £500,000, saving thousands compared to standard rates.
Non-UK residents face a 2% surcharge on all residential purchases, refundable if they spend 183 days in the UK within two years.
Companies buying residential properties over £500,000 pay a 17% flat SDLT rate, significantly increasing costs for corporate investors.
Additional properties, like second homes or buy-to-lets, incur a 3% surcharge on the entire purchase price, unless replacing a main residence.
Non-residential and mixed-use properties have lower SDLT rates (0% to 5%), with thresholds starting at £150,000, offering savings for business owners.
Exemptions apply for inherited properties, divorce settlements, and gifts, while reliefs like multiple dwellings relief can reduce SDLT for specific transactions.
Filing an SDLT return and paying on time is critical, as missing the 14-day deadline triggers penalties starting at £100 plus interest.
Business owners can minimize SDLT through strategies like structuring transactions or claiming mixed-use rates, but professional advice is essential to avoid HMRC penalties.
How Can You Use This Knowledge Practically?
So, what’s the big picture? SDLT isn’t just a tax—it’s a major factor in your property purchase budget, especially with 2025’s tighter thresholds. For taxpayers, knowing your liability upfront (e.g., £3,375 on a £267,500 home) helps you plan. First-time buyers should maximize relief by targeting homes under £500,000, while investors need to factor in the 3% surcharge when calculating rental yields. Business owners, particularly those eyeing commercial or mixed-use properties, can save significantly by structuring deals wisely—Kerenza’s £8,000 mixed-use saving in Cardiff is proof. But mistakes, like misfiling or missing reliefs, can cost thousands, as seen in the Leeds couple’s £9,000 overpayment.
To make it actionable, use HMRC’s calculator at www.gov.uk/stamp-duty-land-tax-calculator for precise estimates, and always involve a solicitor or tax advisor for complex cases. Keep records for four years, and check for refund opportunities, like the 36-month window for main residence sales. With HMRC collecting £8.6 billion from residential SDLT in 2023-24 and ramping up audits, staying informed is your best defence.
Here’s a final table to drive it home, comparing SDLT costs for typical scenarios before and after April 2025’s threshold changes:
Scenario | Property Price | SDLT Pre-April 2025 | SDLT Post-April 2025 | Difference |
First-Time Buyer | £350,000 | £0 (relief up to £425,000) | £2,500 (relief up to £300,000) | +£2,500 |
Standard Buyer | £267,500 | £0 (threshold £250,000) | £3,375 (threshold £125,000) | +£3,375 |
Additional Property | £400,000 | £15,000 | £19,500 | +£4,500 |
Non-Residential | £600,000 | £19,500 | £22,500 | +£3,000 |
Source: GOV.UK, SDLT rates, April 2025; author’s calculations
This table shows how the lower thresholds hit buyers harder, especially for second homes. Armed with these insights, you’re better equipped to tackle SDLT, whether you’re buying your dream home or expanding your business portfolio. Stay sharp, plan ahead, and keep those tax bills in check.
FAQs
Q1: What is Stamp Duty Land Tax (SDLT) in the UK?
A1: SDLT is a tax paid by buyers on the purchase of properties or land over certain thresholds in England and Northern Ireland.
Q2: Does SDLT apply to properties in Scotland or Wales?
A2: No, Scotland has Land and Buildings Transaction Tax, and Wales has Land Transaction Tax, replacing SDLT in those regions.
Q3: Can SDLT be paid in instalments?
A3: SDLT must be paid in full within 14 days of property purchase completion, with no option for instalments.
Q4: Is SDLT applicable on new-build properties?
A4: Yes, SDLT applies to new-build properties if the purchase price exceeds the relevant threshold, just like existing properties.
Q5: What happens if SDLT is not paid on time?
A5: Late payment incurs a £100 penalty, rising to £200 after three months, plus interest on the unpaid tax.
Q6: Can SDLT be deferred for large property purchases?
A6: SDLT cannot be deferred; it must be paid within 14 days, regardless of the property’s value.
Q7: Does SDLT apply to properties purchased through auctions?
A7: Yes, SDLT applies to auction purchases, calculated on the final bid price, with payment due within 14 days.
Q8: Are there SDLT exemptions for first-time buyers purchasing shared ownership properties?
A8: First-time buyers can claim SDLT relief on shared ownership properties up to £500,000, paying no tax on the first £300,000.
Q9: How does SDLT apply to properties held in a trust?
A9: SDLT depends on the trust type and beneficiary rights, with potential 2% non-resident surcharge if trustees are non-UK residents.
Q10: Can SDLT be reclaimed if a property purchase falls through?
A10: If the purchase is cancelled before completion, no SDLT is due, and any paid tax can be refunded.
Q11: Does SDLT apply to temporary or holiday lets?
A11: SDLT applies to holiday lets if purchased as additional properties, incurring the 3% surcharge on top of standard rates.
Q12: Is SDLT charged on the VAT portion of a commercial property purchase?
A12: No, SDLT is calculated on the net purchase price, excluding VAT, for commercial properties.
Q13: Can married couples claim first-time buyer relief if one spouse has owned a property?
A13: No, both spouses must have never owned a property to qualify for first-time buyer relief.
Q14: How does SDLT apply to properties bought for business use?
A14: Business-use properties may qualify for non-residential SDLT rates, but residential use by staff triggers higher rates.
Q15: Is SDLT payable on lease extensions?
A15: SDLT may apply to lease extensions if the premium or rent’s net present value exceeds the £125,000 threshold.
Q16: Can SDLT be avoided by transferring property ownership to a family member?
A16: SDLT is not due on gifted properties unless the recipient assumes a mortgage, which triggers tax on the debt.
Q17: Does SDLT apply to properties bought through a self-invested personal pension (SIPP)?
A17: Yes, SDLT applies to properties purchased via a SIPP, based on the purchase price and property type.
Q18: How is SDLT calculated for properties with annexed land?
A18: SDLT is calculated on the total price, with residential or mixed-use rates depending on the land’s primary use.
Q19: Can SDLT be appealed if calculated incorrectly?
A19: Yes, buyers can appeal to HMRC within 12 months if they believe the SDLT assessment is incorrect.
Q20: Is SDLT applicable on properties purchased for charitable trusts?
A20: Charitable trusts are exempt from SDLT if the property is used for charitable purposes, subject to HMRC approval.
About The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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