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 8 OCTOBER 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. 

Stamp duty calculator.

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. 

Did COVID-19 affect 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 started paying stamp duty were raised. 

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. During the stamp duty holiday, the buy-to-let stamp duty rate was 3% on properties up to £250,000. However, on 1 October 2021, rates went back to what they were before coronavirus measures were put in place and 3% is now payable on properties up to £125,000. See the table below. 

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, 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 

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. In Scotland and Wales you need to pay the relevant devolved authority.

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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