Stamp Duty Land Tax For Buy-To-Let Properties

Buying a rental property can be a great investment. But there’s one cost that can catch you off guard: stamp duty land tax.

Unlike buying your own home, a buy-to-let usually means paying an extra 3% on top of standard stamp duty rates.  This can be a significant cost, so it’s important to factor it into your budget.

With that in mind, here’s a quick guide about stamp duty land taxes for buy-to-let properties in the UK.

How Much Stamp Duty Land Tax Do I Need To Pay?

Check how much you owe using the stamp duty calculator. Simply, enter the purchase price of the property you’re buying.

What Is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax you pay when you buy a property or land over a certain price in England and Northern Ireland. 

The tax rate depends on the price of the property, whether it’s your first home, and if you’re buying it to live in or as an investment.

How Does It Apply To Buy-to-Let Properties?

For buy-to-let properties, SDLT usually comes with a higher rate. 

If you’re buying a property as an investment or a second home in England and Northern Ireland, you’ll pay an extra 5% on top of the standard rates. 

This makes buy-to-let properties more expensive upfront compared to homes you’ll live in yourself.

In Wales and Scotland, the tax works a little differently.

Wales uses Land Transaction Tax (LTT), while Scotland applies Land and Buildings Transaction Tax (LBTT). 

Both also add extra charges for second homes or buy-to-let properties, with Scotland including a 6% Additional Dwelling Supplement (ADS) for these purchases.

Here’s a breakdown of the current rates:

Current Buy To Let Stamp Duty Land Tax in the UK

England and Northern Ireland

Property Price (£)	SDLT Rate (Buy-to-Let)
£0 – £40,000*	0%
£40,000 – £250,000	5%
£250,001 – £925,000	10%
£925,001 – £1.5m	15%
Over 1.5m	17%

For example, if you’re buying a £300,000 buy-to-let property in England, here’s how the SDLT works:

• First £250,000: 5% = £12,500
• Next £50,000 (up to £300,000): 10% = £5,000
• Total SDLT: £17,500

From 1 April 2025, the nil-rate band for standard residential purchases will drop back to £125,000. This will change the SDLT rates for buy-to-let properties as follows:

Property Price (£)	SDLT Rate (Buy-to-Let)
£0 – £40,000*	0%
Up to £125,000	5%
£125,001 to £250,000	7%
£250,001 to £925,000	10%
£925,001 to £1.5 million	15%
Over £1.5 million	17%

Using the same £300,000 example, the SDLT would now be:

• First £125,000: 5% = £6,250
• Next £125,000 (up to £250,000): 7% = £8,750
• Final £50,000 (up to £300,000): 10% = £5,000
• Total SDLT: £18,500

The return of the lower nil-rate band for standard purchases (£125,000) means less of the property price will qualify for the 0% SDLT rate. 

As a result, you’ll pay more tax on properties purchased after April 2025. 

Since most properties in the UK are priced above £125,000, this change will likely increase the tax burden for many investors.

If you’re planning to invest in a buy-to-let property, timing matters. Buying before the changes take effect could save you thousands in SDLT

But, it’s always wise to weigh the long-term costs and benefits, including property maintenance, mortgage payments, and other tax considerations, before making your decision.

Wales: Land Transaction Tax (LTT)

Property Price (£)	LTT Rate (Buy-to-Let)
Up to £180,000	4%
£180,001 – £250,000	7.5%
£250,001 – £400,000	9%
£400,001 – £750,000	11.5%
£750,000 – £1.5 million	14%
Over £1.5 million	16%

Scotland: Land and Buildings Transaction Tax (LBTT)

Property Price (£)	LBTT Standard Rate
Up to 145,000	0%
145,001 to 250,000	2%
250,001 to 325,000	5%
325,001 to 750,000	10%
Over 750,000	12%

ADS in Scotland is 6% and applies to the entire purchase price of properties over £40,000 when buying an additional dwelling.

When Must Stamp Duty Be Paid on Buy-to-Let Properties?

Once you’ve sealed the deal on a buy-to-let property, you have 14 days to sort out the stamp duty. This tight timeline means you need to act quickly. 

Usually, the solicitor who helped with your property purchase will manage this for you. They’ll make sure the payment goes through on time and add the cost to your final bill. 

This setup makes the process smoother for you, ensuring you meet the deadline without any stress.

Can Stamp Duty Be Added to a Buy-to-Let Mortgage?

The short answer is: it’s not straightforward. Most lenders set their loan-to-value (LTV) ratios to a maximum of 75-80%. 

This means your mortgage can only cover this percentage of the property’s value, leaving you to fund the rest, including stamp duty, from your savings.

Adding stamp duty to your mortgage would increase your LTV ratio, and very few lenders might consider such an arrangement. It’s a risky move that could stretch your finances thin.

So, while technically possible in some rare cases, it’s usually not a practical option for most investors.

Stamp Duty Considerations

First Time Buyers

Typically, first-time buyers benefit from stamp duty relief if purchasing residential properties up to a certain value. But, this relief does not extend to buy-to-let properties unless the first-time buyer intends to live in the property.

If a first-time buyer purchases a property to let it, they will be subject to the standard rates and additional 5% stamp duty surcharge applicable to second homes and buy-to-let properties.

Married Couples and Civil Partners

For stamp duty purposes, married couples and civil partners are treated as a single entity. 

If one partner owns a property, then any additional property purchased by either partner will attract higher stamp duty rates, including buy-to-let properties.

Unmarried Couples and Joint-Buyers

Unmarried couples and individuals purchasing a property jointly are assessed individually for stamp duty. 

If one of the buyers doesn’t own any other property, they wouldn’t be liable for the extra 3% surcharge on their share. 

But, the practical implementation of this can be complex and might vary depending on the specific circumstances.

Moving House

If you are moving house and replacing your main residence, the higher stamp duty rates for additional properties won’t apply, provided you sell your previous main residence. 

If you end up owning two properties temporarily because of the moving process, you might have to pay the higher rates but could be eligible for a refund if you sell your previous main residence within 36 months.

Holding Financial Interest in a Property

Owning part of another property, like through inheritance or trust, doesn’t always mean higher stamp duty. 

If your share is 50% or less, or if your interest is part of a trust or partnership, you might not face extra charges. Always tell your solicitor about any such interests.

What Properties Are Excluded from Buy-to-Let Stamp Duty?

While there aren’t any exemptions solely for buy-to-let properties, you might still benefit from general stamp duty reliefs under specific circumstances:

• Properties under a Certain Value – If you buy a property for less than £40,000 in England and Northern Ireland, you won’t need to pay stamp duty. This threshold applies to each buyer in the transaction.
• Mobile Homes, Caravans, and Houseboats – These aren’t considered ‘land’ for stamp duty purposes, so they’re not subject to these taxes.
• First-Time Buyer Relief – If you’re stepping onto the property ladder for the first time, you might qualify for a discount, even though this is less common for buy-to-let purchases.
• Multiple Dwelling Relief – Buying more than one property at once? This relief could reduce the overall stamp duty you pay.
• Charity Relief – If a charity buys a property, it might not have to pay stamp duty.
• Crown Servant Relief – If you or your spouse/civil partner are serving overseas as Crown servants, you might be exempt from the higher rates for non-UK residents.

Stamp duty rules can be complex and subject to change. Always check the latest guidelines or talk to a professional to understand how these rules apply to you. 

Remember, Scotland’s LBTT and Wales’ LTT have their own sets of rules and exemptions.

The Bottom Line

Getting professional advice can take a lot of the stress and uncertainty out of buying a buy-to-let property, especially when it comes to complex issues like stamp duty.

A buy-to-let broker can offer tailored advice based on your unique situation. Many brokers offer initial consultations for free, so you can get an idea of how they can help before you commit.

To find a specialist, get in touch with us. We’ll connect you with a reputable mortgage broker specialising in buy-to-let mortgages.