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Stamp Duty for Buy-to-Let

If you’re buying a buy to let property or a second home in the UK, you’ll need to pay a stamp duty surcharge. We look at the exceptions, common questions and provide a second home stamp duty calculator so you know where you stand.

Stamp Duty for Buy to Let

Why is there a higher stamp duty tax on buy-to-let properties?

A booming buy-to-let market in the UK has contributed to a housing crisis that is pushing home ownership beyond the reach of millions of people.

In 2015 the government announced that a new 3% additional stamp duty rate would be introduced for anyone buying a second home. “People buying a home to let should not be squeezing out families who can’t afford to buy a home,” said the then Chancellor George Osborne at the time. He added that the money the new rate raised would be ploughed into building more affordable homes.

There are 2.5m buy-to-let landlords in the UK, according to HMRC, and if you are one of them then this tax won’t affect the property you already own.

But, if you are thinking of purchasing a buy-to-let property then the Additional Stamp Duty Rate could affect what you can afford to buy.

Do you pay stamp duty on buy-to-let property?

Yes, if the property is worth more than £40,000 and the purchase will result in you owning more than one property. Known as the Additional Stamp Duty Rate in England and Northern Ireland, it is a minimum 3% extra charge on top of your standard stamp duty bill. The surcharge is levied when you are buying a property that will result in you owning more than one. The most common example is someone who owns their own home and is looking to invest in a buy-to-let property.

You can find out more about the main stamp duty tax with our dedicated guide to stamp duty land tax and stamp duty for second homes

There are different rates in England and Northern Ireland, Scotland and Wales

Buy to Let stamp duty rates in England and Northern Ireland:

Up to £125,000 0% 3%
£125,001 to £250,000 2% 5%
£250,001 to £925,000 5% 8%
£925,001 to £1.5 million 10% 13%
Over £1.5 million 12% 15%

Buy to Let LBTT rates in Scotland:

Up to £145,000 0% 4%
£145,001 to £250,000 2% 6%
£250,001 to £325,000 5% 9%
£325,000 to £750,000 10% 14%
Over £750,000 12% 16%

Buy to Let stamp duty rates in Wales: 

Purchase price of property Stamp duty rate Stamp duty rate for additional properties
Up to £180,000 0% 4%
£180,001 up to £250,000 3.5% 7.5%
£250,001 to £400,000 5% 9%
£400,001 to £750,000 7.5% 11.5%
£750,001 to £1.5m 10% 14%
Over £1.5m 12% 16%

How much stamp duty do I pay for a buy to let property?

The additional stamp duty rate is payable on top of the normal stamp duty that you pay on any property. So, you’ll pay more stamp duty for a buy-to-let property than you would normally.

For example, if you were buying a £200,000 buy-to-let property in England the stamp duty payable is £7500.

That is £6,000 more stamp duty to pay than if you were buying a £200,000 residential property to live in.

To calculate exactly how much stamp duty you will need to pay, use our free stamp duty calculator

Are there any exceptions?

There is no stamp duty on properties worth less than £40,000.

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

There is also an exemption if the Buy-to-Let property is the first and only property that you will own.

There are other stamp duty exemptions such as multiple dwellings relief, when purchasing multiple smaller properties as part of one transaction. For more advice on stamp duty exemptions, Cornerstone Tax specialise in stamp duty surcharge advice and refunds.  They offer free initial advice and, if you choose to use their service, can assist with the calculation and submitting your stamp duty return.

Is it still worth getting a buy-to-let?

When you are doing your sums to see if a buy-to-let property is for you it’s important that you factor in the stamp duty bill as it could be a factor in deciding whether property investment is the best choice for you.

See our full guide on what to consider with buy-to-let and getting a buy-to-let mortgage

You may want to consider speaking to a Mortgage Broker or an Independent Financial Advisor (IFA) before you take the plunge in order to make sure a buy-to-let property is the best place to put your savings.

Buy-to-Let Stamp Duty FAQs

How and when do I pay the extra tax?

The additional stamp duty rate is payable within 30 days of your completion date, at the same time as your main stamp duty bill.

A tax return needs to be submitted to HMRC detailing what you owe, and the bill paid at the same time. In most circumstances your solicitor or conveyancer will arrange this for you.

You can find out more with our Step-by-Step Guide to Buying a Home.

What counts as a ‘main residence’?

Your main residence for stamp duty purposes is the place where you and your family spend most of your time. The taxman will assess this by looking at where you work, where your children are registered at school and where you vote.

What if my main home is abroad?

If you own a property abroad and want to buy an investment property in the UK, then the extra stamp duty rate will still apply.

Can I put our family home in my wife’s name to avoid the tax?

When it comes to stamp duty the taxman classes married couples as a single unit. So, it doesn’t matter whose name your properties are in, if you as a couple own more than one at the end of the transaction then the additional stamp duty rate applies.

If you aren’t married, then you could avoid the additional stamp duty rate if only one of you is named on the deeds of your main residence and the other partner buys the investment property in their name alone.

What if I’m a first-time buyer?

If you don’t already own any property and are looking to invest in a buy-to-let, then you won’t pay the additional stamp duty rate as you will only own one property.  Note that you will not qualify for first-time buyer stamp duty relief as it can only be used for a property you intend to live in.

What if the investment property I’m purchasing is abroad?

You won’t have to pay the additional rate on investments purchased abroad as stamp duty is only payable on UK property.

What if I inherit a property I want to rent out?

Stamp duty isn’t payable on inherited properties. But, if you go on to buy another property you may have to pay the additional rate if it will result in you owning more than one property.

What if I buy a home with an annexe?

If you purchase a property as a main residence, and it has an annexe or granny flat that is bought in the same transaction, is within the grounds of the main residence and isn’t worth more than a third of the overall value of the purchase, you won’t have to pay the additional rate.

However, if the whole property isn’t going to be your main residence, and you own another property, you will pay the additional rate.   For more advice see stamp duty specialists’, Cornerstone Tax, article on common stamp duty surcharge exemptions and how to claim a stamp duty refund.

For free expert buy-to-let mortgage advice see our award winning mortgage broker service. Find a mortgage online, view today’s best deals, speak to a broker now or request a call back

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