Buy an additional residential property in England or Northern Ireland (a buy-to-let, a second home, a holiday property) and you pay a 5% stamp duty surcharge on top of the standard rates. It applies to the whole purchase price, band by band, and it has been 5% since 31 October 2024, when the Autumn Budget raised it from the original 3% introduced in 2016. For most landlords it is the single largest acquisition cost after the deposit, and it is the cost most often miscalculated, because the surcharge stacks on rates that themselves changed on 1 April 2025.
The practical effect is simple to state and easy to get wrong: the surcharge equals 5% of the purchase price, on top of whatever standard SDLT would have been due. On a £300,000 buy-to-let that is £15,000 of surcharge added to £5,000 of standard SDLT, so £20,000 in total rather than the £5,000 a home-mover would pay. Get the bands wrong, or assume the surcharge is still 3%, and your yield model is wrong before you have collected a pound of rent.
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What is the stamp duty buy-to-let surcharge in 2026/27?
The surcharge is formally the higher rates for additional dwellings under Schedule 4ZA of the Finance Act 2003. Finance Act 2025 ss.50-51 set the rate at 5% for transactions on or after 31 October 2024. Separately, the standard SDLT nil-rate band returned to £125,000 on 1 April 2025 (it had been temporarily £250,000 from September 2022), which raised the bill for every additional-property buyer at the lower end of the market.
The surcharge is not a single flat percentage applied to the price. It is added to each standard band, and each band applies only to the slice of the price that falls within it, in the same way income tax bands work. The table below is the position for an individual buying an additional dwelling in England or Northern Ireland in 2026/27.
| Portion of purchase price | Standard rate | Rate with 5% surcharge |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
Note that the £125,000 nil-rate band does not give an additional-property buyer a tax-free slice. The 5% still applies from the first pound; what the band does is set the rate the surcharge is added to. A property below £40,000 escapes the surcharge entirely under a separate floor, covered below.
Worked example: stamp duty on a £300,000 buy-to-let
Take a landlord who already owns their home and buys a £300,000 rental in Leeds. The calculation runs band by band:
- First £125,000 at 5% = £6,250
- £125,001 to £250,000 (£125,000) at 7% = £8,750
- £250,001 to £300,000 (£50,000) at 10% = £5,000
- Total SDLT = £20,000
A home-mover buying the same property would pay £5,000 (0% on the first £125,000, 2% on the next £125,000, 5% on the final £50,000). The surcharge accounts for the £15,000 difference, which is exactly 5% of the £300,000 price. That symmetry is a useful sense-check: the surcharge component should always equal 5% of the whole price, so if your figure does not, you have made an arithmetic error somewhere.
The £20,000 is payable in cash at completion, not financed against the property, and it is not deductible against your rental profits. It is, however, an allowable cost for Capital Gains Tax when you eventually sell, so it is recovered on disposal rather than year by year. That timing point matters for cash flow, and it is the same logic that makes Section 24 finance-cost restriction bite hardest on geared, higher-rate landlords in the early years.
Who counts as an additional-property buyer?
The surcharge applies where, at the end of the day of the transaction, you own a major interest in another residential property worth £40,000 or more, and the property you are buying is not a replacement for your only or main residence. Three points catch landlords out repeatedly:
- It is not about the property being a rental. What triggers the surcharge is owning more than one dwelling at the end of the day, not the use you put the new one to. Buy a flat to live in while keeping your existing home let, and the new flat still attracts the surcharge unless it replaces your main residence.
- Worldwide property counts. A holiday home in Spain or an inherited share of a family property abroad is a residential interest for these rules. A first UK buy-to-let bought by someone who owns a home overseas is an additional dwelling.
- Couples are one unit. Married couples and civil partners who live together are treated as a single buyer. A purchase in one spouse's sole name attracts the surcharge if either of them owns another dwelling, which closes the common assumption that buying in the lower-earning partner's name sidesteps the charge.
Mortgaged or owned outright makes no difference. Beneficial ownership through a trust counts. The test is deliberately wide, which is why the genuine exemptions, rather than clever ownership splits, are where any real planning sits.
The £40,000 floor and the main exemptions
The surcharge is switched off entirely, not merely reduced, where the additional dwelling is worth less than £40,000. This is a threshold on the new purchase, not an allowance subtracted from a larger price, so it helps with genuinely low-value lots (some auction or freehold-ground-rent purchases) but does nothing for a normal buy-to-let.
Beyond the £40,000 floor, the surcharge does not apply where:
- You are buying your only or main residence and own no other dwelling.
- You are replacing your main residence, selling the old one on the same day or claiming a refund within the 36-month window (see below).
- You inherit a property and the dwelling you later buy is your main residence, where your inherited share is 50% or less in a single property, ignored for three years from the date of death.
- A first-time buyer is buying their main residence, in which case first-time buyer relief gives 0% up to £300,000 and 5% on the slice from £300,000 to £500,000, with the relief fully withdrawn above £500,000.
Replacement of main residence: the refund route
The most valuable let-out for ordinary movers is the replacement-of-main-residence rule. If you complete on a new home before you have sold the old one, you pay the 5% surcharge at completion as a temporary owner of two homes. Sell the previous main residence within 36 months of the new purchase and you can reclaim that 5% from HMRC.
The refund is not automatic. You must claim it within 12 months of selling the old home, or 12 months of the filing date of the new purchase return, whichever is later. Miss the deadline and the surcharge becomes permanent even though you qualified on the facts. This is a refund of a charge you genuinely incurred, not an exemption you can apply up front, so the cash still has to be found at completion.
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Buying through a limited company
A company buying residential property pays the higher rates on the entire price from the first pound. There is no main-residence concept for a company, so the 5% surcharge cannot be avoided by incorporating, and for a single dwelling over £500,000 a company or other non-natural person can instead fall within the 17% flat rate under Schedule 4A FA 2003 unless a relief (most commonly the property-rental-business relief) applies. Either way, the SDLT cost of buying through a company is never lower than buying personally. For a side-by-side of the personal and company rates with worked figures, see our SDLT rates for buy-to-let and limited companies guide.
The reason landlords still incorporate is income tax and Capital Gains Tax, not stamp duty. A company is outside the Section 24 finance-cost restriction, deducts mortgage interest in full against profits, and pays corporation tax rather than income tax on rental profits. Those advantages can outweigh the higher SDLT over a long hold, but transferring an existing personally-held portfolio into a company is itself a purchase at market value, triggering both SDLT (surcharge included) and a CGT disposal. The decision and its traps are set out in our buy-to-let limited company guide, and the double-SDLT question on incorporation in SDLT on incorporation: do I pay stamp duty twice?.
Scotland, Wales and the non-resident surcharge
The 5% surcharge is an England and Northern Ireland tax. The devolved nations run their own systems:
| Where | Tax | Additional-property charge |
|---|---|---|
| England and Northern Ireland | SDLT | 5% additional dwellings surcharge |
| Scotland | LBTT (Revenue Scotland) | 8% Additional Dwelling Supplement (from 5 December 2024) |
| Wales | LTT (Welsh Revenue Authority) | Higher rates for additional residential property |
The bands and main rates differ in each nation, so a Scottish or Welsh purchase must be worked out on its own figures, not by adapting the SDLT table. On top of all of this, a non-UK resident buying residential property in England or Northern Ireland pays a further 2% surcharge, which stacks on the 5% additional rate. A non-resident landlord buying an additional dwelling therefore faces standard rates plus 7% in total.
Where the surcharge sits in your wider tax position
The surcharge is the visible, up-front cost, but it is rarely the most significant tax on a buy-to-let over its life. Three other charges shape the real return:
- Section 24. Individual landlords no longer deduct mortgage interest from rental profits; relief is given as a 20% basic-rate tax credit instead. For a geared higher-rate landlord this can cost far more over a few years than the one-off surcharge, and it can push taxable income into a higher band. Our property investment tax guide works through the combined effect.
- April 2027 rate change. Finance Act 2026 enacted separate rates for property income from 6 April 2027 in England, Wales and Northern Ireland (Scotland is carved out for 2027/28): 22%, 42% and 47%, replacing the 20/40/45 main rates for rental profit. The Section 24 reducer rises to 22% in step, so the basic-rate credit keeps pace and no new wedge opens for basic-rate landlords. It is a genuine rise for higher and additional-rate landlords on the profit itself.
- CGT on disposal. When you sell, residential gains are taxed at 18% within the basic-rate band and 24% above it (unified rates under TCGA 1992 s.1H, Finance Act 2024), after the £3,000 annual exempt amount for 2026/27. The 5% surcharge you paid on acquisition is added to base cost here, recovering some of the up-front charge. The mechanics, including the 60-day reporting deadline, are in our CGT rates on property guide and the wider capital gains tax on property guide.
Filing, payment and MTD readiness
SDLT is reported on its own return, with payment, within 14 days of completion. That deadline is short and unforgiving, so the surcharge cash needs to be ready at completion, not arranged afterwards. The conveyancer normally files and pays from completion funds, but the liability is yours, and a wrong additional-rates declaration is your exposure if HMRC enquires.
Separately, Making Tax Digital for Income Tax is now live and rolling out by income level: from 6 April 2026 for landlords and sole traders with qualifying income over £50,000, from 6 April 2027 over £30,000, and from 6 April 2028 over £20,000. If your rental and self-employment income crosses the relevant threshold, you will keep digital records and file quarterly updates, which makes accurate acquisition records (the SDLT paid, surcharge included, alongside legal and survey costs) worth capturing at purchase rather than reconstructing years later when you sell. Our MTD for Income Tax guide sets out the thresholds and what changes.
Getting the surcharge right before you commit
The surcharge is mechanical once you know the bands, but the costly errors are at the edges: a couple assuming a sole-name purchase escapes the charge, a mover missing the 36-month refund window, an overseas owner forgetting the 2% non-resident layer, or an incorporation that triggers a fresh surcharge on a portfolio already taxed once. Each of those is avoidable with the right facts established before exchange. For a portfolio purchase, a multi-dwelling transaction, or an incorporation where SDLT, CGT and Section 24 all interact, it pays to model the whole position before you commit rather than discover the bill at completion.