Stamp Duty or SDLT are both short forms of Stamp Duty Land Tax.
Stamp Duty is a tax payable when residential property (both freehold and leasehold) is purchased in the UK over a certain threshold. The threshold was increased from £125,000 to £250,000 on 23 September 2022, and if the purchaser is a first time buyer, certain reliefs apply. This reduction in stamp duty is only temporary and is due to end on 31 March 2025.
However, investors who already own another residential property continue to pay the additional 3% stamp duty surcharge on top of the usual SDLT rates.
SDLT rates for landlords from 23 September 2022 – 31 March 2025
On 23 September 2022, the then newly appointed Chancellor of the Exchequer, Kwasi Kwartang, raised the nil-rate threshold for stamp duty from £125,000 to £250,000 for properties in his infamous mini-budget.
However, the extra 3% paid by those who are buying a second property, as a second home or landlord, has been kept. Consequently, for property investors, the overall SDLT payable reduced a little from the increase in the basic threshold to £250k.
Here are the rates for investors who buy an additional property:
| Property or lease premium or transfer value for investors* | SDLT rate |
|---|---|
| Up to £250,000 | 3% |
| The next £675,000 (the portion from £250,001 to £925,000) | 8% |
| The next £575,000 (the portion from £925,001 to £1.5 million) | 13% |
| The remaining amount (the portion above £1.5 million) | 15% |
* Assuming the investor owns another property
Worked example for an additional property of £300k
As a result, increasing the standard nil-rate threshold to £250,000 has reduced the SDLT payable by property investors on a purchase of £300k by £2,500.
By way of example, here’s the breakdown of how to calculate SDLT from 23 September 2022 to 31 March 2025 for a £300k property:
| Purchase price bands (£) | Percentage rate (%) | SDLT due (£) |
|---|---|---|
| The first £250,000 | 3 | £7,500 |
| Above £250,000 and up to £925,000 | 8 | £4,000 |
| Above £925,000 and up to £1,500,000 | 13 | 0 |
| Above £1,500,000+ | 15 | 0 |
| Total SDLT due | £11,500 |
Lastly, note that there is an additional surcharge of 2% for buyers who aren’t resident in the UK.
Sunset clause on SDLT for 31 March 2025
Jeremy Hunt introduced a “sunset clause” to the stamp duty reduction in his Autumn Statement on 17 November 2022.
This means that the nil-rate threshold for stamp duty will go back to £125,000 from £250,000 after 31 March 2025, increasing the stamp duty for all by £2,500 on a property over £250,000 from 1 April 2025.
Useful resources
- GOV.uk guide
- Stamp duty calculator – the official one from the GOV.uk Tax Service.