Stamp Duty on Buy to Let Property

Stamp Duty on Buy to Let Property: The Facts

Amy Jackson
Amy Jackson
Property Editor
Updated 20 September, 2021
6 Min Read

Stamp Duty on Buy to Let Property Stamp Duty on Buy to Let Property

Are you a buy to let investor who wants to get clued up on stamp duty tax? 

If you’re just getting started and want to find out how much stamp duty on buy to let is owed, this guide to stamp duty on buy to let property is for you. 

Read our handy guide to stamp duty on buy to let property in the UK, with stamp duty graphs and a buy to let stamp duty calculator to help you work out potential rates. 

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Do You Pay Stamp Duty on Buy to Let Property Do You Pay Stamp Duty on Buy to Let Property

Do You Pay Stamp Duty on Buy to Let

Yes, those investing in buy to let property are required to pay a stamp duty tax fee.  

Buy to let properties are classed as a second property, meaning stamp duty rates apply.  

How Much Stamp Duty Is Payable on Buy to Let Purchases How Much Stamp Duty Is Payable on Buy to Let Purchases

How Much Stamp Duty Is Payable on Buy to Let Purchases? 

If you already own a home that you live in, and you’re buying a second property that you intend to rent out for income rather than living in it, you’ll pay more stamp duty land tax than someone buying their first home 

The rates in our stamp duty tax table below show how much buy to let stamp duty tax buyers are expected to pay in the UK from 1st October 2021 onwards. 

Stamp Duty Tax Rates on Buy to Let Property Stamp Duty Tax Rates on Buy to Let Property

 

Here’s an example of the amount of stamp duty tax that would be payable on a buy to let purchase in the UK. 

The property price: £250,000 

The stamp duty land tax rate: 5%  

The total amount paid in SDLT£12,500 

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What If I'm a First Time Buyer Investing in Buy to Let What If I'm a First Time Buyer Investing in Buy to Let

What If I’m a First-Time Buyer Who’s Investing in Buy to Let

If you’re a first-time buyer choosing to invest in buy to let property as their first property purchase, you won’t pay the same rate of stamp duty tax as a typical buy to let investor. 

Most buy to let investors will already own their main residence but will buy a second property to rent out and make money. 

If you don’t already own a home of your own, you’ll pay stamp duty tax at a reduced rate compared to buy to let investors who already own property. 

As a first-time buyer investing in buy to let, you’ll pay zero stamp duty tax on any property worth £125,000 or less.  

Buy to Let Stamp Duty Calculator

Stamp Duty due:
Effective Rate: 1%

See Full Calculation below:

Tax Brand % Taxable Sum Tax
less than £125k 0
£125k to £250k 2 £125,000 £2,500
£250k to £925k 5 £0 £0
£925k to £1.5m 10 £0 £0
rest over £1.5m 12 £0 £0
Stamp Duty due: £0
Effective Rate: 0%

See Full Calculation below:

Tax Brand % Taxable Sum Tax
less than £125k 3% £0 £0
£125k to £250k 5% £125,000 £2,500
£250k to £925k 8% £0 £0
£925k to £1.5m 13% £0 £0
rest over £1.5m 15% £0 £0
Stamp Duty due: £0
Effective Rate: 0%

See Full Calculation below:

Tax Brand % Taxable Sum Tax
less than £300k 0 £0 £0
£300k to £500k 5 £0 £0
£500k to £925k 8 £0 £0
£925k to £1.5m 13 £0 £0
rest over £1.5m 15 £0 £0

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I’m Confused About Stamp Duty Tax – Will I Need to Pay the Surcharge

Stamp duty land tax is one of the added costs that come with buy to let property which all property investors should know about.  

But if you’re just starting out and buying your first buy to let property, it can be confusing to know if you’re required to pay higher stamp duty rates than the typical buyer. 

Here is a handy mindmap to help you understand whether you need to pay the stamp duty surcharge on buy to let property.

Stamp Duty Map Stamp Duty Map

 

I’m an Overseas Buyer – Do I Pay the Same Stamp Duty Tax on Buy to Let Property?

If you’re an overseas buyer, you’ll need to pay an extra surcharge of 2% on any purchases.  

This rule came into effect in April 2021 and means that the added overall cost of stamp duty tax on buy to let property is even greater for overseas buyers.  

If, for example, you’re an overseas buyer who’s purchasing a buy to let property worth £125,000, you would pay a total of £6,200 in stamp duty land tax 

This is because you’ll pay £3,750 – the typical buy to let stamp duty tax on a property of this value – and an additional overseas investor surcharge of £2,500.  

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Who Is Exempt From Paying Buy to Let Stamp Duty Tax Who Is Exempt From Paying Buy to Let Stamp Duty Tax

Who Is Exempt From Paying Buy to Let Stamp Duty Tax?  

Some people are exempt from paying stamp duty tax on buy to let property purchases 

Check this list to see if you could avoid the cost of buy to let stamp duty. 

  • Those buying property worth £40,000 or less.  
  • Those buying a caravan, houseboat, or mobile home. 
  • Being a first-time buyer who doesn’t own their own property (non-buy to let stamp duty rates will apply) 
What Are the Rules For Buy to Let Stamp Duty Tax For Couples What Are the Rules For Buy to Let Stamp Duty Tax For Couples

What Are the Rules For Buy to Let Stamp Duty Tax For Couples? 

If you’re in a couple, either married or unmarried, you might be wondering whether the buy to let rules for stamp duty on buy to let property apply to you depending on how many properties each person owns.  

For instance, some couples wonder whether a buy to let surcharge for stamp duty land tax would apply for them if only one person within the couple owns a property already. 

Unfortunately for married couples or those in a civil partnership, the buy to let surcharge tax price would apply in this circumstance.  

This is because married couples or those in a civil partnership are treated as one person when it comes to stamp duty tax. 

For those who are still married but not living together, this rule doesn’t apply.  

Couples who are unmarried can also avoid these higher rates if the person in the couple who doesn’t already own a property buys property as an individual, as they’ll still be classed as a first-time buyer 

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Stamp Duty on Buy to Let Property - FAQs

Stamp duty tax must be paid within the first 14 days after buying your property. 

Regardless of where your current property is, you’ll need to pay the second homes surcharge when buying another property in England or Northern Ireland as you don’t classify as a first-time buyer. 

If you own a property in England or Northern Ireland and you’re buying a second property (whether as a holiday home or buy to let property), you won’t need to pay stamp duty tax as this rule doesn’t apply to international countries. 

Yes, limited companies still need to pay stamp duty on buy to let properties.

If you inherit a property and wish to rent it out as a buy to let home, you won’t need to pay stamp duty tax as you’re not buying the property. 

In Scotland and Wales, buyers will pay Land and Transaction Tax/Land Transaction Tax. 

This tax is different to stamp duty but works similarly. 

In Wales, new tax rates indicate that buyers must only pay tax on properties with a value of £180,000 or over. This applies to all buyers, whether first-time buyers or not. 

For buy to let investors in Wales, a 4% surcharge is added onto the taxable amount. 

In Scotland, the threshold for paying tax is £145,000 for first-time buyers, and £40,000 for buy to let investors purchasing additional properties. 

When Do You Pay Stamp Duty on Buy to Let?

Stamp duty tax must be paid within the first 14 days after buying your property. 

I Already Own a Property Abroad - Do I Have to Pay the Buy to Let Stamp Duty Surcharge?

Regardless of where your current property is, you’ll need to pay the second homes surcharge when buying another property in England or Northern Ireland as you don’t classify as a first-time buyer. 

What If I’m Buying a Second Property Abroad?

If you own a property in England or Northern Ireland and you’re buying a second property (whether as a holiday home or buy to let property), you won’t need to pay stamp duty tax as this rule doesn’t apply to international countries. 

Do Limited Companies Pay Stamp Duty on Buy to Let?

Yes, limited companies still need to pay stamp duty on buy to let properties.

I Inherited a Property That I Plan to Let Out - Do I Need to Pay Stamp Duty Tax?

If you inherit a property and wish to rent it out as a buy to let home, you won’t need to pay stamp duty tax as you’re not buying the property. 

Do You Pay Stamp Duty Tax on Properties in Wales and Scotland?

In Scotland and Wales, buyers will pay Land and Transaction Tax/Land Transaction Tax. 

This tax is different to stamp duty but works similarly. 

In Wales, new tax rates indicate that buyers must only pay tax on properties with a value of £180,000 or over. This applies to all buyers, whether first-time buyers or not. 

For buy to let investors in Wales, a 4% surcharge is added onto the taxable amount. 

In Scotland, the threshold for paying tax is £145,000 for first-time buyers, and £40,000 for buy to let investors purchasing additional properties. 

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For more details about stamp duty tax in the UK, read our complete stamp duty guide complete with stamp duty tax calculator. 

Disclaimer: 

Please be aware that the stamp duty tax rates mentioned in this guide are not the discounted rates applied from July 2020 – September 2021 in response to the Coronavirus pandemic. 

This guide is informational and should not be considered financial advice. Please seek out a financial advisor for more information on stamp duty costs and the financial elements of a buy to let purchase.