Buy-to-let Stamp Duty in the UK

You pay Stamp Duty when buying an apartment over a certain price in the UK. How much you pay depends on a few factors. Learn about Stamp Duty in the UK.

Jale

2 minute read

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Updated on 14 Nov 2023

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Investing

If you're a landlord in the UK looking to purchase a buy-to-let property, then it's important to understand the implications of Stamp Duty Land Tax (SDLT).

In this article, we'll talk about the basics of SDLT, how it applies to buy-to-let properties, and when you have to pay it.

SDLT is a tax payable when you buy a property or land in the UK over a certain price. It applies to residential and commercial properties, including buy-to-let properties.

Stamp Duty is an important consideration for landlords when purchasing a property to rent out. As the Stamp Duty rate depends on the price of the property, landlords need to factor in the cost of Stamp Duty when determining whether a property is a viable investment.

The Stamp Duty threshold is when the tax becomes payable on a property purchase in the UK. You only pay Stamp Duty if you buy a property above the threshold.

Current Stamp Duty thresholds are:

1. £250,000 for residential properties
2. £425,000 for first-time buyers buying a residential property worth £625,000 or less
3. £150,000 for non-residential land and properties

There’re different Stamp Duty rates for different price thresholds. At which rate you’ll pay the Stump Duty depends on the following:

1. The purchase price of the property
2. Whether you’re a first-time buyer
3. Purpose of the purchase (primary residence, buy-to-let)
4. Whether you’re a UK resident

In the UK, there’re different Stamp Duty rates for first and second homes. First-time buyers can benefit from a reduced Stamp Duty rate on properties. But this lower rate only applies to properties the buyer intends to live in as their primary residence. If the property is intended to be a buy-to-let investment, then it’s subject to the higher Stamp Duty rates for second homes.

For residential properties, the lowest amount of Stamp Duty you’ll pay is 2% on properties valued between £125,000 and £250,000. For buy-to-let properties, a 3% surcharge is added on top of the standard Stamp Duty rates.

This means that the SDLT rates for buy-to-let properties are as follows:

If you are a non-UK resident planning to purchase buy-to-let property in the UK, an additional 2% Stamp Duty surcharge will apply on top of existing buy-to-let Stamp Duty rates.

It's worth noting that these rates only apply to properties in England and Northern Ireland.

Stamp Duty reliefs

Charitable trusts and registered social landlords are exempt from the additional 3% Stamp Duty surcharge on buy-to-let properties.

You must pay Stamp Duty within 14 days of completing the purchase of the property. Your solicitor or conveyancer will usually handle the payment of SDLT on your behalf.

If you fail to pay SDLT on time, HMRC can charge you interest rates and fines. So ensure you have the funds to cover the SDLT liability before purchasing the property.

This article is for informational purposes and is not a substitute for legal advice. Please consult the appropriate authorities or a lawyer for personalised support.

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