The additional dwelling surcharge has been a feature of the SDLT regime since April 2016, when it was introduced to cool the buy-to-let market and protect first-time buyers. The surcharge was increased to 5% at the Autumn Budget on 31 October 2024 — the change was immediate and applied to transactions completing on or after that date.
The surcharge applies to any residential property purchase where the buyer owns (or part-owns) another residential property at the end of completion day. This includes buy-to-let purchases, second homes, holiday lets, and any property owned anywhere in the world.
SDLT rates for additional dwellings (landlords) from 31 October 2024
The rates below apply to individual landlords buying residential property in England:
- £0–£250,000: 5% (standard 0% + 5% surcharge)
- £250,001–£925,000: 10% (standard 5% + 5% surcharge)
- £925,001–£1,500,000: 15% (standard 10% + 5% surcharge)
- Over £1,500,000: 17% (standard 12% + 5% surcharge)
- Example — £300,000 BTL purchase: £250,000 × 5% = £12,500 + £50,000 × 10% = £5,000. Total SDLT = £17,500
- Example — £500,000 BTL purchase: £250,000 × 5% = £12,500 + £250,000 × 10% = £25,000. Total SDLT = £37,500
When does the surcharge apply?
The surcharge applies in the following circumstances:
- You own (or part-own) any other residential property anywhere in the world at the end of completion day
- Your spouse or civil partner owns a residential property — even if buying in your sole name, the surcharge typically applies
- The property is a buy-to-let, second home, or holiday let
- You are buying a new build as an additional property
- Spouses and civil partners are treated as one unit — if either owns another property, the surcharge applies to both
- Joint buyers: if any buyer in a joint purchase already owns another property, the surcharge applies to the entire purchase
When does the surcharge NOT apply?
Key exemptions and cases where the surcharge does not apply:
- First residential property purchase — you have never owned a residential property anywhere in the world
- Replacing your main residence: if you are selling your main home and buying a new one, the surcharge does not apply — provided you have sold the old home by completion. If the old home has not yet sold, the surcharge applies at completion and is refundable within 3 years if the old home is then sold
- Caravans and houseboats: certain mobile dwellings do not count as 'residential property' for surcharge purposes — check HMRC's guidance for specific cases
- Inherited property: a very small inherited share (under 50%) may be disregarded — but a full inherited property counts
- Purchases by certain public bodies and charities may be exempt
Buying in a limited company (SPV)
The surcharge applies equally to company purchases, with additional ATED obligations for high-value properties:
- SPV companies buying residential property pay the additional dwelling surcharge at the same rates as individual buyers
- Properties worth over £500,000 held in a company are also subject to the Annual Tax on Enveloped Dwellings (ATED) — an annual charge. The current rates range from £4,400/year (£500k–£1m) to over £200,000/year for very high-value properties
- ATED relief: properties used in a qualifying rental business are exempt from ATED — but relief must be claimed annually via an ATED return. Failure to file can result in significant penalties
- The SDLT cost of buying in an SPV is the same as buying personally — the SPV structure does not reduce SDLT
- Take specialist tax advice before structuring purchases in a company — the SPV route offers income tax advantages (Section 24 does not apply) but involves additional compliance obligations
SDLT refund — replacing your main residence
If you paid the surcharge but then sell your previous main home within 3 years, you can claim a refund:
- Claim the refund using HMRC's online SDLT amendment process — within 12 months of the sale of the previous main residence, or within 12 months of the 3-year anniversary of the new purchase (whichever is later)
- You must have lived in the sold property as your only or main residence — investment properties do not qualify
- The refund is the difference between what you paid and what you would have paid without the surcharge
- Contact HMRC's Stamp Taxes helpline or use a solicitor to make the refund claim — provide the original SDLT reference and evidence of the sale of the previous main home
Frequently asked questions
Does the 5% surcharge apply to all buy-to-let purchases, even small ones?+
Yes — the 5% surcharge applies to any additional residential property purchase above £40,000, regardless of size or value. Even a £50,000 terraced house purchased as a second property is subject to the surcharge. SDLT on a £50,000 additional dwelling is £2,500 (5% on the whole amount, since it falls below the £250,000 threshold where the first rate band starts at 5%).
I own my home jointly with my spouse and want to buy a BTL in my sole name — does the surcharge apply?+
Yes, in most cases. Spouses and civil partners are treated as one unit for SDLT purposes. If your spouse owns a residential property (including your jointly owned main home), you are treated as owning that property too for surcharge purposes — even if you are buying the BTL solely in your own name. The surcharge will apply. There is no advantage to buying in sole name rather than jointly when either spouse already owns a residential property.
Can I avoid the surcharge by gifting property to a family member before buying?+
Gifting a property before purchasing a BTL might appear to avoid the surcharge, but HMRC looks carefully at transactions structured to avoid SDLT. If the arrangement is commercially artificial or specifically designed to avoid the surcharge, HMRC can apply anti-avoidance provisions. Additionally, gifting a property potentially triggers Capital Gains Tax (on the deemed disposal at market value) and Inheritance Tax considerations. Take specialist tax advice before attempting any surcharge mitigation structure.
What happens to my SDLT if the BTL purchase falls through after exchange?+
SDLT is payable on completion, not exchange. If the transaction falls through before completion, no SDLT is due. If it falls through after completion (rare but possible with court-ordered rescission), you may be able to claim a refund — but this is a complex area requiring legal advice. In standard abortive transactions (exchange but no completion), no SDLT liability arises.