Key facts
- The surcharge is 5% on top of all standard residential SDLT rates (increased from 3% on 31 October 2024).
- It applies when you already own (or will own) another residential property at the end of the transaction day.
- The surcharge applies to the entire purchase price, including the nil-rate band.
- You can reclaim the surcharge if you sell your previous main residence within 36 months.
- Companies buying residential property always pay the higher rates.
What Are the Higher Rates?
Since 1 April 2016, an SDLT surcharge has applied when an individual purchases a residential property and, at the end of the day of the transaction, owns more than one residential property. The surcharge was increased from 3% to 5% by the Autumn Budget 2024, effective from 31 October 2024.[1]
The surcharge is added to every slice of the standard rates, including the nil-rate band:
| Purchase Price Band | Standard Rate | Higher Rate (+ 5%) |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 – £250,000 | 2% | 7% |
| £250,001 – £925,000 | 5% | 10% |
| £925,001 – £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
When the Higher Rates Apply
The higher rates apply when, at the end of the day of the purchase, you own two or more residential properties and the new property is not replacing your main residence. Common scenarios:[1]
- Buy-to-let purchases — buying an investment property while owning your main home
- Second homes — buying a holiday home or pied-à-terre
- Company purchases — companies always pay the higher rates on residential property
- Buying before selling — buying a new home before you have sold the old one (but see reclaim rules below)
- Properties owned overseas — owning a property abroad counts
Worldwide ownership: The higher rates consider your worldwide property interests. If you own a residential property anywhere in the world, it counts towards the additional dwelling test. This includes properties held jointly or through trusts.
Replacing Your Main Residence
The higher rates do not apply if you are replacing your only or main residence — provided the old home is sold on or before the day you buy the new one. If timings mean you sell after buying:[1]
- You pay the higher rates on the new purchase initially
- If you sell your previous main residence within 36 months, you can apply to HMRC for a refund of the surcharge
- The refund claim must be made within 12 months of the sale of the old property (or 12 months of the filing date of the SDLT return, whichever is later)
Worked Example
You own your main home and buy a £250,000 buy-to-let property:
| Slice | Amount | Rate | SDLT |
|---|---|---|---|
| £0 – £125,000 | £125,000 | 5% | £6,250 |
| £125,001 – £250,000 | £125,000 | 7% | £8,750 |
| Total SDLT | £15,000 | ||
| Standard rate comparison | £2,500 | ||
| Additional cost of surcharge | £12,500 | ||
Inherited Property and the Surcharge
If you have inherited a property, it is disregarded for the additional dwelling test if:[3]
- You own a share of 50% or less in the inherited property, or
- You inherited a share of more than 50% but the inheritance was more than 36 months before the new purchase
If you inherited more than 50% within the last 36 months, the inherited property does count, and the higher rates will apply to your new purchase.
Married Couples and Civil Partners
Married couples and civil partners who live together are treated as a unit for the higher rates:[1]
- If either spouse or civil partner owns an additional property, the surcharge applies to a new purchase by either of them
- This is the case even if the purchase is made in one person’s name only
- Separated couples who are no longer living together are treated as individuals
Tip: If you are buying a new home and need time to sell your current one, budget for the 5% surcharge initially. You can reclaim it from HMRC once the old home sells, provided it is within 36 months. The refund typically takes 15–20 working days from a valid claim.
Frequently Asked Questions
When did the SDLT surcharge increase to 5%?
The surcharge increased from 3% to 5% on 31 October 2024, following the Autumn Budget 2024 announcement. Transactions with an effective date on or after 31 October 2024 are subject to the 5% rate.
Do I pay the surcharge if I am replacing my main home?
If you are buying a new main residence before selling your current one, you will initially pay the surcharge. However, you can reclaim it by applying to HMRC within 12 months of selling your old home (provided you sell within 36 months of buying the new one).
Does inherited property count as an additional dwelling?
Inherited property is only counted if you own a 50% or greater share and the inheritance was within the 36 months preceding the new purchase. A share of 49% or less, or an inheritance more than 36 months ago, is generally disregarded.
Does the surcharge apply to properties worth less than £40,000?
No. The higher rates do not apply if the purchase price is less than £40,000. Properties purchased below this threshold are also generally exempt from SDLT returns.
Further Reading
- Replacing Your Main Residence — reclaiming the surcharge in detail
- Residential SDLT Rates (2025/26) — full rate tables
- Non-Resident Surcharge (2%) — additional surcharge for overseas buyers
- Inherited Property & SDLT — how inherited homes affect SDLT
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