Stamp duty land tax SDLT is the tax imposed on buyers for the properties or pieces of land they bought in England or Northern Ireland. Scotland and Wales have their tax equivalents but with different rates—Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT), respectively. We will refer to them as stamp duty tax in this article for simplicity.
Need to Know! Stamp duty thresholds have dropped back to their original levels from 1 April 2025 (recalling the temporary thresholds increase from 23 September 2022 to 31 March 2025). Learn more about the latest thresholds and more.
Who Pays Stamp Duty Tax?
SDLT applies to properties regardless of if they are freehold (bought outright) or leasehold (bought via a mortgage). The following property buyers, whether they purchase in England and Northern Ireland, Scotland, or Wales, are subject to stamp duty tax, except for when they qualify for the exemptions or fall within the tax-free threshold:
- Residential property buyers
- Non-residential property buyers
- First-time buyers
- Second home buyers
- Investors
- Shared ownership buyers
Usually, it is the conveyancer, solicitor, or real estate agent who files the SDLT return, collects the tax amount owed by and from the buyer, and pays in a lump sum to the HMRC within 14 days (in England and Northern Ireland) or 30 days (in Scotland and Wales) upon the completion of the purchase, which they should strictly follow to avoid penalties and interests.
This comes with an additional admission fee as they handle all the paperwork, whether the buyer is eligible for tax relief or not. However, if they do not do so or the ones who buy a property decide to handle the paperwork themselves, the buyers are solely responsible for the process, wherein most seek help from tax experts.
Stamp Duty Land Tax (SDLT) vs Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT)
The stamp duty land tax SDLT rates property buyers will pay depend on several factors, such as the following:
- Purchase price of their property;
- Which tax band the property falls in;
- Where the property is located;
- If they are first-time or second homebuyers (residential);
- If they bought a property for investment (non-residential) purposes (e.g., buy to let);
- If they are a UK resident or not;
- If they qualify for reliefs and exemptions.
Each of the stamp duty taxes has different thresholds (limit where zero tax applies) and imposes different rates on main residences and additional property purchases (e.g., second homes or holiday homes). Take note that non-residential properties are charged differently.
Stamp Duty Land Tax (SDLT)
Major SDLT changes took effect from 1 April 2025 on both main residential properties and second homes:
| Stamp Duty Land Tax Band (Purchase Price) | Main Residence (Standard) Rate | Additional Property Rate |
|---|---|---|
Less than £125,000 |
0% |
5% |
£125,001 to £250,000 (up to £300,000 for first-time home buyers) |
2% |
7% |
£250,001 to £925,000 |
5% |
10% |
£925,001 to £1.5 million |
10% |
15% |
£1.5 million and above |
12% |
17% |
Those who purchase another property will pay the additional property rate, charged on top of the standard rate, which is an additional 5% (formerly 3%) for each of the stamp duty tax bands.
The threshold for first-bought residential property in England or Northern Ireland is now £300,000 (formerly £425,000). The relief will now only be available for up to £500,000 (formerly £625,000).
Land and Buildings Transaction Tax (LBTT)
Here are the rates on residential properties in Scotland since 1 April 2021 (no changes in 2025):
| Land and Buildings Tax Band (Purchase Price) | Main Residence (Standard) Rate | Additional Property Rate |
|---|---|---|
Less than £145,000 (up to £175,000 for first-time home buyers) |
0% |
4% |
£145,001 to £250,000 |
2% |
6% |
£250,001 to £325,000 |
5% |
9% |
£325,001 to £750,000 |
10% |
14% |
£750,001 and above |
12% |
16% |
Scotland charges 4 per cent for additional properties, also called the Additional Dwelling Supplement (ADS), which works the same way as above. First-time home buyers’ threshold in the country is £175,000 without upper limits.
Land Transaction Tax (LTT)
There are no changes to residential and additional properties’ rates for Land Transaction Tax (LTT) in 2025 (same rates since 10 October 2022):
| Land Transaction Tax Band (Purchase Price) | Main Residence (Standard) Rate | Additional Property Rate |
|---|---|---|
Less than £225,000 (both for first-time homebuyers and main residences) |
0% |
4% — up to £180,000 7.5% — £180,001 to £250,000 |
£225,001 to £400,000 |
6% |
8% |
£400,001 to £750,000 |
7.5% |
12% |
£750,001 to £1,500,000 |
10% |
14% |
£1,500,001 and above |
12% |
16% |
The additional property rate in Wales is much higher, with differing 3 to 4 per cent charges. The threshold for first-time homebuyers is similar to those of main residential properties.
How is Stamp Duty Tax Calculated?
The rate of stamp duty residential property buyers pay will be based on the details above. Different stamp duty rates apply to non-residential properties in England and Northern Ireland (SDLT) and Scotland (LBTT), in which the threshold is set at £150,000. In Wales (LTT), the threshold is £225,000.
They can work out how much tax they pay by taking into account those rates, their circumstances, and whether or not they are eligible for relief.
For example, John buys a house worth £450,000 for the first time in England. He qualifies for the First-Time Buyers’ Relief. His stamp duty land tax payable will be calculated as follows:
£0 – £300,000: Tax = £0 (0% rate for first-time buyers)
£300,001 – £450,000: Tax = £150,000 × 5% = £7,500
Total SDLT Payable: £7,500
The same calculation goes for other countries’ stamp duties. They can also use a stamp duty calculator on various platforms to come up with their exact rates and work with tax experts alongside so they do not miss out on any reliefs and exemptions they may qualify for.
Exemptions and Relief
Property buyers should take note of the exemptions and reliefs, so they do not miss out on any chance to save on their purchase. Here are some that may apply to them:
- Zero-Rate Stamp Duty Tax
Self-building owners will not need to pay the tax. The same goes for them if they have zero-carbon homes that cost less than £500,000.
- First-Time Buyer Relief
First-time homebuyers refer to those who have never owned, or part-owned, a property within the UK or abroad, including any inheritance (even if they have not lived in it or sold it immediately). Homebuyers will be eligible if they and anyone else they buy with are legitimate first-time buyers and intend to live in it as their main residence.
If they qualify for first time buyer, In England and Northern Ireland, they will pay zero tax for their first £300,000, given their purchase is within £500,000, in which they pay a 5% discounted rate within those value. No relief is available for purchases beyond £500,000. In Scotland, the relief is set at £175,000 without upper limits. In Wales, it is the same for whether they are buying a main residence or non-residential property, which is £225,000.
- Shared Ownership Relief
If they buy through a shared ownership scheme, they will only be paying tax on the part of the property they will own, in which they can pay one-off (also called market value election) or in stages. With a one-off payment, they can pay their SDLT based on the full price of their home.
This means they will be free of any payment in the future once they decide to increase their share or the property’s market value goes up. Whilst if they choose to pay in stages as they increase their shares, they may incur higher SDLT rates when the property’s value rises as they buy more shares.
- Multiple Dwelling Relief
They can also avail themselves of reliefs when they buy more than one dwelling, given that their transaction or other linked transaction has freehold or leasehold interests in more than one dwelling.
- Charities Relief
When charities purchase properties for charitable purposes, they do not have to make an SDLT return and pay the tax.
- Other Exemptions and Reliefs
Whilst second-time or additional property buyers are subject to additional stamp duty rates, they can apply for a refund of the higher rates they paid when they sold their main home within three years of purchasing a new one, which they intend to use as their main dwelling.
Recent Changes and Updates [2025]
Only the Stamp Duty Land Tax (SDLT) changed from 1 April 2025. Scotland and Wales’ stamp duty rates and thresholds remain.
The changes on SDLT are mainly reversal to the original rates, to recall the temporary threshold increase between 23 September 2022 and 31 March 2025:
- Decreased threshold to £125,000 (from £250,000) for not first-time homebuyers
- Decreased threshold for zero stamp duty tax rate to £300,000 (from £425,000) for first-time homebuyers
- Decreased property threshold to qualify for First-time Homebuyer’s Relief; now £500,000 (formerly £625,000)
Seek the Help of Tax Experts
Knowing the available thresholds, exemptions, and reliefs and the payment timeframe (to avoid penalties) can greatly curb property buyers’ stamp duty tax liabilities as they eat up a considerably large amount overall. Claiming the wrong amount of refund particularly puts buyers at risk of huge CIS penalties.
Legend Financial is here to help any buyers’ stamp duty liability, from working out the rates, applying the reliefs and exemptions, making stamp duty returns, and claiming the right refund amounts, to assisting them to comply with the payment timeframe. Reach us today!
