Buy-to-let stamp duty

The rules around stamp duty on buy-to-let properties are slightly different from the stamp duty paid by homeowners. See how much you’ll have to pay if you’re a landlord buying a new property for your portfolio.

The rules around stamp duty on buy-to-let properties are slightly different from the stamp duty paid by homeowners. See how much you’ll have to pay if you’re a landlord buying a new property for your portfolio.

Mark Gordon
From the Mortgages team
4
minute read
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Posted 1 JULY 2021

Do landlords have to pay for stamp duty on buy-to-let property?

Yes, like homeowners, landlords have to pay stamp duty (officially Stamp Duty Land Tax or SDLT) when they buy property – whether they’re buying it in their own name or via a company. But the amount paid is different from buying a home of your own. Since April 2016 landlords, and second home owners, have had to pay a higher percentage (three percentage points) than homebuyers. This surcharge can add thousands of pounds to the bill for a new property.

Is stamp duty on buy-to-let the same across all the UK?

No. The amount you have to pay may also differ between the devolved nations, as the Welsh and Scottish governments decide their own property taxes. In Scotland the tax is known as Land and Buildings Transaction Tax (LBTT). It’s administered by Revenue Scotland, with support from Registers of Scotland (RoS). In Wales it’s known as Land Transaction Tax (LTT) and is administered by the Welsh Revenue Authority. 
 
This guide applies only to stamp duty in England and Northern Ireland.

How much is stamp duty on a buy-to-let property? 

How much you’ll have to pay on a buy-to-let property will depend on:

  • how much you paid for the property
  • the date of purchase.

The date of purchase is important because it’s the stamp duty thresholds at that date that will apply.

What is a stamp duty threshold? 

The threshold is the purchase price where SDLT starts to apply. If you buy a property for less than the threshold, there’s no SDLT to pay. However, landlords will still have to pay the surcharge rate, even if the property would otherwise attract a zero rate for a homebuyer.

Has COVID-19 affected stamp duty rates on buy-to-let as well as for homebuyers? 

Yes. To keep the property market moving during the pandemic, the levels at which people start paying stamp duty were raised.

This was good news for homebuyers, many of whom didn’t have to pay any stamp duty if they were buying a property under the new higher threshold. So while homebuyers could buy a property up to £500,000 without having to pay any stamp duty at all until 30 June 2021, it was different for buy-to-let. Landlords still had to pay the differential surcharge amount.

The stamp duty holiday measures are now being phased out and the thresholds lowered. But there will be some stamp duty relief until 1 October, when thresholds will go back to what they were before the holiday.

What are the temporary stamp duty rates on buy-to-let property in England due to COVID-19?

Stamp duty is calculated in tiers across the price of the property. For example, if a property costs £500,000 you may have to pay one rate of stamp duty on the first £250,000 and a higher rate on the remaining £250,000. The tables below show stamp duty for specific time periods, as set by the government.

To work out how much stamp duty you would have to pay for your property purchases, use the UK government’s stamp duty calculator.

Time period  Portion of property price  Buy-to-let stamp duty rate 
1 July to 30 September 2021 Up to £250,000 3%
  The next £675,00 (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%

 

If you bought a property for £765,00 to rent out, you would pay:

  • 3% on the first £250,000 (£7,500)
  • 8% on the remaining £515,000 (£41,200)
  • Total £48,700
Time period  Portion of property price  Buy-to-let stamp duty rate 
From 1 October 2021 onwards Up to £125,000 3%
  The next £125,000 (the portion from £125,001 to £250,000) 5%
  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%

 

If you bought a property for £765,00 to rent out during this period, you would pay:

  • 3% on the first £125,000 (£3,750)
  • 5% on the next £125,000 (£6,250)
  • 8% on the remaining £515,000 (£41,200)
  • Total £51,200

From 1 October, 2021 stamp duty rates return to the rates before the coronavirus pandemic measures were put in place.

What are standard stamp duty rates on buy-to-let property in England?

The usual buy-to-let stamp duty rates on property in England and Northern Ireland are:

Portion of property price  Buy-to-let stamp duty 
£0-£40,000*  0%
£0-£125,000**  3%
£125,001 to £250,000  5%
£250,001 to £925,000  8%
£925,001 to £1.5 million  13%
£1.5 million+  15%
*If total property price is £40,000 or less.  
**If total property price is more than £40,000. 


With average house prices in England at around £268,000, if you bought a property of this value you’d need to pay buy-to-let stamp duty as follows:

  • 3% on the first £125,000 (£3,750)
  • 5% on the remaining £125,000 (£6,250)
  • Total £10,000

Can I get first time buyer stamp duty relief for buy-to-let? 

No. To get first-time buyer stamp duty relief you must be buying a property you intend to live in.

Do I have to pay stamp duty if I’m buying the property through my company?

Yes. If the purchase is a made by a company rather than a person, the additional buy-to-let stamp duty will still apply, regardless of the legal structure of the buy-to-let business.

Are there any exemptions where I don’t have to pay stamp duty on buy-to-let property?

Caravans, mobile homes and houseboats are all excluded from the additional stamp duty rate.

When do I have to pay the stamp duty I owe?

You have 14 days from the 'effective date' - typically the date of purchase - to file a Stamp Duty Land Tax (SDLT) return to HMRC and pay any SDLT due.

If you don’t submit a return and pay the tax within 14 days, HMRC might charge you penalties and interest.

How do I pay stamp duty?

Usually, your solicitor will organise the payment of stamp duty together with the required return, but it’s your responsibility to make sure the return has been filed on time.

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