What is Stamp Duty in the UK?

Stamp Duty Land Tax (SDLT) is a government tax payable when you buy residential property or land over a certain price in England and Northern Ireland. As one of the most significant transaction costs for property investors, understanding how SDLT works is essential before committing to any UK property purchase.

The tax is calculated on a tiered basis. For residential properties, the first £250,000 is tax-free for standard purchases. The next band from £250,001 to £925,000 attracts a 5% rate, while the portion between £925,001 and £1,500,000 is taxed at 10%. Any amount above £1,500,000 incurs a 12% charge.

For overseas buyers, an additional 2% surcharge applies on top of the standard rates across all bands. This means a non-UK resident purchasing a £500,000 property would pay approximately £22,500 in SDLT, compared to £12,500 for a UK resident making the same purchase.

Higher rates also apply if you already own a residential property. The 3% additional rate for second homes and buy-to-let investments is applied across all bands, creating a meaningful consideration for portfolio investors building a multi-property portfolio in the UK.