Stamp Duty … what residential property purchasers need to know

Stamp Duty Land Tax (SDLT) has been firmly in the spotlight in recent days due to Angela Rayner’s failure to pay what she ought to have done on the purchase of her new home in Sussex. For many house purchasers the SDLT regime is relatively straightforward, but here is a quick reminder of some key points.

How is Stamp Duty calculated?

SDLT is charged on property purchases on a progressive ‘slice’ basis, with different portions of the purchase price being taxed at increasing rates. The rates changed most recently in April 2025 and are as follows:

• Up to £125,000: 0% (nil rate band)
• £125,001-£250,000: 2%
• £250,001-£325,000: 5%
• £325,001-£400,000: 5%
• £400,001-£750,000: 5%
• £750,001-£925,000: 5%
• £925,001-£1.5 million: 10%
• Above £1.5 million: 12%

SDLT on second properties

The rates above apply to your first property.  If you buy a second property, then you will usually have to pay more SDLT. If you happen to buy a property worth less than £40,000 then no further tax will be payable but for all other second properties, you will need to pay 5% more than the standard rates listed above.  This rule applies irrespective of whether the second property is to be a holiday home, a buy-to-let or is going to become your main residence.

Where SDLT complications arise

Ms Rayner fell foul of a rule relating to a property she has previously owned and then put into trust for her disabled son.  HMRC treat a parent as still having an interest in a property if it is held in trust and the beneficiary is under 18. This meant she was liable to pay an additional 5% surcharge on the SDLT due on the purchase of her new home.

If you are in any doubt about your own personal situation at the point of purchasing a new property, then you should obtain individual advice.

SDLT ‘Multiple Dwellings Relief’ removed

Back in 2011 a new Multiple Dwellings Relief was introduced to help stimulate the residential property market.  It gave potential SDLT savings to those buying a property which could be treated as two or more dwellings; they could potentially treat the two parts as individual transactions, potentially paying less Stamp Duty.  This rule was reversed on 1 June 2024 and is no longer an option for those buying houses with self-contained annexes or similarly configured properties.

SDLT on Shared Ownership Properties

If you purchase a shared ownership property, you will potentially pay SDLT each time you buy a further share of the property, depending on the value of the property.  Anyone buying an initial share for less than the nil rate band, currently £125,000, will pay no SDLT.

However, if you then go on to buy additional shares in the same property the transactions are deemed to be ‘linked’ and you will then pay SDLT on the next section at the appropriate rate.  You are not able to claim, for instance, that you are only buying a further £100,00 so no tax is due.  At current rates you would be paying 2% on this next section as it would put your total linked purchases in the £125,001 to £250,000 band.

Shared ownership purchase transactions are deemed to be linked irrespective of the time that elapses between them and the rent paid can also form part of any calculation.

Other Linked Transactions for Stamp Duty purposes

There are various other circumstances in which transactions are treated as linked for tax purposes.  They include property transactions that are linked because they are part of the same arrangement – for instance the two members of the same family buy different parts of a property at the same time.  We can explain in more detail how this works if you think it may apply to a purchase that you are considering.

What to do next?

When we agree to act for you, we will always indicate your Stamp Duty position based on the information and figures that you have given us.  If you feel that there may be any potential complications in relation to SDLT.

In most cases, the calculation is straightforward, as per the online Government SDLT calculator. If, however, your position turns out to be unusual or complex, we will be happy to put you in touch with tax professionals who can clarify the position in writing for you to ensure that you go into the transaction confident that your SDLT calculation is correct.

How To Contact Us:

To contact a member of our team, you can fill in our online enquiry form, email info@fraserdawbarns.com, or call your nearest office below. If you’d like to speak to a member of our team at one of our offices across Norfolk and Cambridgeshire, visit our offices page.

Wisbech: 01945 461456

March: 01354 602880

King’s Lynn: 01553 666600

Ely: 01353 383483
Downham Market: 01366 383171

This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.