Higher rates of Stamp Duty Land Tax

Whilst many know that there is a stamp duty land tax (SDLT) surcharge for those buying an additional property, the rules that dictate when the surcharge is payable are not as well known. SDLT applies to property in England and Northern Ireland, although there are equivalent taxes in Scotland and Wales.

This factsheet is aimed at individuals, but partnerships and companies may also need to pay higher rates of SDLT.

The higher rates

The higher rates of SDLT apply when a person buys a residential property (or part of one) that is worth £40,000 or more. The rates apply to the value of a property or lease premium as follows from 1 April 2025:

·Up to £125,000 – 5%

·The next £125,000 – 7%

·The next £675,000 – 10%

·The next £575,000 – 15%

·The remainder – 17%

The higher rates apply if a person is buying an additional residential property. The rates are 5% higher than if a person were buying their only property.

What is meant by ‘additional residential property?

A property is ‘additional’ for these purposes if:

·It is worth £40,000 or more;

·It is not the only property worth £40,000 or more that is owned (or part owned by the person);

·The person has not sold or given away their previous main home; and

·Nobody else has a lease on the property with more than 21 years left to run.

These criteria not only apply to the buyer, but also their spouse or anyone they are buying the new property with.

Example - buying with spouse

If a person is buying a property and their spouse or civil partner is subject to the higher SDLT rates (e.g. they already own a property), the higher SDLT rates will apply to the transaction, even if the spouse is not buying the new property.

Example - buying with another person

When buying property with one or more other people, if any of the buyers has to pay the higher rates, the higher rates will apply to the transaction as a whole.

Exclusions

The higher rates will not apply to:

·A person who uses the new property as their only/main home and has previously given away or sold their last only/main home;

·Property that is worth less than £40,000, mixed-use or moveable (e.g. a mobile home);

·Transfers between spouses, where no one else is involved in the transfer; or

·A person who inherited a share of a dwelling less than 3 years ago, and their share in the property does not exceed 50%.

Refunds of higher-rate SDLT

If a person has paid higher rate SDLT and sells or gives away their previous home in the next 3 years, it may be possible to get a refund for the higher rate SDLT.

This does not apply if the person’s spouse still owns all or part of the previous home.

Further information

This factsheet is not exhaustive and we recommend that you seek professional advice if you think you may be affected by higher rate SDLT.

Guidance on the higher rates of stamp duty can be found here: https://www.gov.uk/guidance/stamp-duty-land-tax-buying-an-additional-residential-property#the-higher-rates