Detailed guide: Stamp Duty Land Tax: buying an additional residential property

Updated: This guidance has been updated to include extra detail about how Stamp Duty Land Tax affects partnerships, trusts and inherited properties.

When the higher rates apply

Individuals and companies need to pay the higher rates when they buy an additional residential property in England, Wales or Northern Ireland. The higher rates apply even if your other residential properties are outside any of these countries.

You’ll also need to pay the higher rates if you don’t own a residential property and buy at least two residential properties at the same time.

Rates on additional properties

Purchase price Rate
up to £125,000 3%
over £125,000 to £250,000 5%
over £250,000 to £925,000 8%
over £925,000 to £1.5 million 13%
over £1.5 million 15%

You’ll need to pay the higher rates on everything you give for the purchase, this is called the ‘consideration’.

If you replace your main home

You won’t have to pay the higher rates if you sell your main home on the same day you buy your new home.

If you sell your main home after you purchase your new home you’ll need to pay the higher rate. You can claim a refund of the higher rates if your old home is sold within 3 years of buying your new home.

You can claim a refund by changing the original return or completing a SDLT repayment request form. This must be claimed within 3 months of the sale or 1 year of the filing date of the return, whichever comes later.

Purchases that aren’t charged the higher rates

You won’t have to pay the higher rates on a new property if the chargeable consideration is less than £40,000.

You also won’t have to pay the higher rates if:

  • someone else holds a lease on the property with more than 21 years to run
  • you purchase a lease that has less than 7 years to run

You won’t be charged the higher rates if your other residential properties meet either of the two criteria above or
each have a value of less than £40,000 when you buy the new property

The higher rates do not apply to:

  • mobile homes, caravans or house boats
  • purpose built student accommodation

Multiple properties in the same building or grounds

Two or more properties bought together may be treated as one if:

  • they are in the same building or grounds
  • the main property accounts for two-thirds of the total consideration

Ownership of the property

Spouses and civil partners

You may be viewed as the owner of a property if it is owned by your spouse or civil partner.

This means if one of you already owns a property and the other person purchases another property, the purchase will be charged at the higher rates.

Spouses or civil partners that are permanently separated will not be treated in this way.

Trusts

You’ll be treated as owning a property if you receive all the income from it and the proceeds from its sale even if you’re not the legal owner.

The beneficiary of a bare trust will be treated as the purchaser of a property.

The beneficiary will also be treated as the purchaser if the trust holds property and the beneficiary is entitled to:

  • to occupy the property for life
  • receive income from the property

When the beneficiary is under 18, the child’s parents are treated as the beneficiary

The trustee will treated as the purchaser of the property if the trust:

  • is not a bare trust
  • does not give the beneficiary a right to occupy a property for life or receive income from it
  • purchases a property for over £40,000 that isn’t subject to a lease of more than 21 years

Companies and partnerships

Companies have to pay the higher rates when they buy any residential properties that are over £40,000 and aren’t subject to a lease of more than 21 years.

You will have the pay the higher rates if you’re partnership already owns a residential property and you purchase another residential property for your partnership.

You won’t have to pay the higher rates if you buy a property for yourself and your only additional properties are used for your partnership’s trade.

Where a trustee buys a property but a beneficiary does not receive any benefits from that property, the purchase is treated as if it were made by a company rather than an individual.

Inherited properties

If you inherit half or less of the major interest in a property in the 3 years before you make a purchase, and you don’t already have an additional residential property, you won’t pay the higher rates.

Source: HMRC