, Property
A buyer works out her stamp duty on a £255,000 flat, sees that the band starts at £250,000, and assumes she has crossed a cliff edge that costs her thousands. She has not. She owes tax on the £5,000 above the threshold, not on the whole price.
The same buyer, purchasing the identical flat in Edinburgh or Cardiff, would pay a different amount under a different tax administered by a different body. Stamp duty is really three taxes wearing one name.
Which tax you pay depends on where the property is
Stamp Duty Land Tax applies in England and Northern Ireland and is collected by HMRC.
Land and Buildings Transaction Tax replaced it in Scotland in April 2015 and is collected by Revenue Scotland.
Land Transaction Tax replaced it in Wales in April 2018 and is collected by the Welsh Revenue Authority.
They share a structure and differ in every detail that matters: the thresholds, the band rates, the reliefs for first-time buyers, and the size of the surcharge on additional properties. A calculator built for one is wrong for the others. Rates in all three are set by their respective governments and changed at fiscal events, so treat any figure you read, including the ones below, as the position at a point in time.
The bands are marginal, which is the part people get wrong
Each rate applies only to the slice of the price that falls in its band, in the same way income tax works.
For residential SDLT in England and Northern Ireland from April 2025, the standard rates are 0% up to £125,000, 2% from £125,001 to £250,000, 5% from £250,001 to £925,000, 10% from £925,001 to £1.5m, and 12% above that. The nil-rate band had been temporarily raised to £250,000 and reverted, which is a good illustration of how often these move.
On that £255,000 flat, the sum is nothing on the first £125,000, 2% on the next £125,000, which is £2,500, and 5% on the last £5,000, which is £250. Total £2,750. Not a cliff edge.
First-time buyers get relief, currently with no SDLT up to £300,000 and a reduced rate up to £500,000, above which the relief is not available at all. That last part is a genuine cliff edge: a first-time buyer paying £500,001 loses the entire relief.
Non-residential and mixed-use property has its own lower band structure, which is why buyers of a shop with a flat above it sometimes pay less than they expect.
The additional property surcharge is the big number
If you are buying an additional residential dwelling, which covers buy-to-let, second homes and a great many ordinary purchases that go wrong on timing, a surcharge applies on top of the standard rates.
In England and Northern Ireland the higher rates for additional dwellings were increased from 3% to 5% for transactions on or after 31 October 2024. In Scotland the Additional Dwelling Supplement rose to 8% in December 2024. In Wales the higher residential rates operate on their own scale. Companies buying residential property face their own treatment, including a flat higher rate, currently 17%, on purchases of dwellings over £500,000 by certain non-natural persons, subject to reliefs for genuine property rental businesses.
Three practical points follow.
- The surcharge applies to the whole price, not just the part above a threshold, so a 5% surcharge on £300,000 is £15,000 on top of the standard charge.
- It catches people replacing a main residence where the sale and purchase do not complete on the same day. You pay the surcharge and reclaim it if you sell the old home within the time limit, which is normally three years. The refund has to be claimed and there is a deadline for claiming it.
- Joint purchases are tested on every buyer. If one of two buyers owns another dwelling anywhere in the world, the surcharge applies to the whole transaction.
There is also a 2% surcharge for non-UK residents buying residential property in England and Northern Ireland, which stacks with the additional dwelling rates.
The deadlines are shorter than people assume
An SDLT return must be filed and the tax paid within 14 days of the effective date of the transaction, usually completion. That window was cut from 30 days in March 2019. LBTT in Scotland and LTT in Wales both run on 30-day deadlines.
In practice your solicitor or conveyancer files it and takes the money at completion, which is why the tax has to be in your funds and cannot be borrowed on the mortgage. Penalties and interest apply for late filing and late payment, and the return is required even when no tax is due if the transaction is notifiable.
Reliefs exist and so do schemes that are not reliefs
There are legitimate reliefs. Multiple dwellings relief was abolished for transactions from June 2024, which changed the arithmetic on portfolio purchases significantly. Relief remains for purchases of six or more dwellings in a single transaction, which may be treated as non-residential. There are reliefs for group transactions, for charities, and for certain purchases by property traders.
Then there are the schemes advertised as stamp duty mitigation, usually involving an artificial structure and a fee taken up front. HMRC has litigated many of these successfully, publishes spotlights on the arrangements it considers ineffective, and pursues the tax plus interest plus penalties years later from the buyer rather than the promoter. If a scheme relies on the transaction not being what it obviously is, assume it will fail.
The area where people most often overpay is the opposite of avoidance: not claiming something they were entitled to. Mixed-use classification, uninhabitable property, and the surcharge refund when a previous main residence eventually sells are all commonly missed, and all can be corrected by amending the return within the time limits.
Where this shows up in the game
In Business Baron, property and lettings, housebuilding and estate agency arrive with the Property & Construction Track, an add-on to the full game. The tax on a purchase follows the year and the nation: stamp duty is a slab tax until December 2014, Land and Buildings Transaction Tax applies in Scotland from April 2015, and Land Transaction Tax in Wales from April 2018. A deal that looks fine on yield often stops looking fine once the tax is counted.