If you're buying a rental property or a second home in England or Northern Ireland, the Stamp Duty bill is bigger than most first-time buyers expect. On top of the normal rates, there's an extra slice called the higher rate for additional dwellings, and it went up to 5% on 31 October 2024.
That single change adds thousands of pounds to a typical purchase. On a £350,000 buy-to-let, the surcharge alone is £17,500.
This guide walks you through how the 5% surcharge works in 2025/26, who pays it, the traps that catch landlords out, and when you can claim some of it back. We've kept it practical, with worked numbers you can follow.
It's written for landlords and second-home buyers. If you're in Scotland or Wales, different taxes apply (LBTT and LTT), so the figures here won't match.
What is the 5% Stamp Duty surcharge?
Stamp Duty Land Tax (SDLT) is the tax you pay when you buy property in England or Northern Ireland. Everyone pays the standard rates. But if you buy an additional residential property, you pay an extra 5% on top.
This extra charge is officially the higher rates for additional dwellings. People usually just call it the second-home surcharge or the buy-to-let surcharge.
It used to be 3%. The government increased it to 5% for purchases completing on or after 31 October 2024 (gov.uk). So if you've read older guides quoting 3%, they're out of date.
The 5% is added to every band of the standard rates, not just the top slice. That's why it stings.
How much is Stamp Duty on a buy-to-let in 2025/26?
SDLT works in bands, like income tax. You pay each rate only on the portion of the price that falls in that band.
Here are the standard residential rates and the higher rates that apply to buy-to-let and second homes, current for 2025/26 (gov.uk):
| Portion of property price | Standard rate | Buy-to-let / second-home rate |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5 million | 10% | 15% |
| Above £1.5 million | 12% | 17% |
Notice there's no 0% band for additional properties. A landlord pays 5% from the very first pound, where a standard buyer pays nothing up to £125,000.
In practice the surcharge always works out to exactly 5% of the whole purchase price (as long as the price is £40,000 or more). The banded total above will always be 5% higher than the standard total for the same property.
Worked example: SDLT on a £350,000 buy-to-let
Illustrative example. Priya, a landlord who already owns her own home, buys a £350,000 flat to let out.
First, the standard SDLT she would pay if this were her only property:
| Band | Amount in band | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000 | 0% | £0 |
| £125,001 to £250,000 | £125,000 | 2% | £2,500 |
| £250,001 to £350,000 | £100,000 | 5% | £5,000 |
| Standard total | £7,500 |
Now the same property with the 5% surcharge, because it's an additional property:
| Band | Amount in band | Rate | Tax |
|---|---|---|---|
| Up to £125,000 | £125,000 | 5% | £6,250 |
| £125,001 to £250,000 | £125,000 | 7% | £8,750 |
| £250,001 to £350,000 | £100,000 | 10% | £10,000 |
| Buy-to-let total | £25,000 |
So Priya pays £25,000 instead of £7,500. The surcharge itself is £17,500, which is exactly 5% of £350,000. That's a serious chunk of upfront cost to factor into any deal.
When does the surcharge apply?
The higher rates apply if, at the end of the purchase, you own two or more residential properties and you're not simply replacing your main home (gov.uk).
A few points catch people out:
- The £40,000 rule. The surcharge only applies if the property you're buying costs £40,000 or more. Below that, it doesn't bite.
- It counts properties anywhere in the world. A holiday flat in Spain still counts towards owning more than one.
- Married couples and civil partners are treated as one unit. If either of you owns another property, the surcharge can apply to the whole purchase, even if only one of you is named on the new deal.
- It's about the property, not your intentions. Whether you'll let it, live in it part-time, or leave it empty doesn't change the test on its own.
If you're a landlord building a portfolio, every additional purchase carries the surcharge. There's no portfolio exemption for individuals buying single dwellings.
Can I avoid the surcharge if I'm replacing my main home?
Yes, in one common situation. If you're buying a new main home and selling your old one, the surcharge shouldn't apply, even though you own other properties such as rentals.
The catch is timing. If you complete on the new home before you've sold the old one, you'll usually have to pay the surcharge up front because, on that day, you own an extra property. You can then claim it back once the old home sells, provided you sell within three years (gov.uk).
This is purely about your main residence. It does not help with a straight buy-to-let purchase, where there's no main home being replaced. For a rental, the surcharge stands.
How do I claim a Stamp Duty refund?
If you paid the surcharge because you hadn't yet sold your previous main home, you can apply to HMRC for a refund of the higher-rate part once the sale completes.
You need to have sold the old main residence within three years of buying the new one. The deadline to claim is within 12 months of the later of two dates: the date you sold the old home, or the filing date of the SDLT return for the new property (gov.uk).
Miss that window and the refund is usually lost, so it pays to diarise it the moment the old home sells. The refund only covers the 5% surcharge element, not the whole SDLT bill.
Buying a rental and unsure what the real upfront cost will be? Get the SDLT, financing and tax all checked before you commit. Book a call with a Zmartly tax adviser and we'll model the full numbers for you.
Does buying through a limited company change things?
Buying through a company doesn't dodge the surcharge. Companies pay the 5% higher rates on residential purchases from the first property, with no £40,000-style relief available in the way it works for individuals replacing a home.
There's also a separate, much higher flat 17% rate that can apply where certain companies (and other "non-natural persons") buy residential property worth more than £500,000 (gov.uk). That rate rose from 15% to 17% on 31 October 2024, and it's a specialist area. Whether incorporation makes sense for your portfolio depends on mortgage costs, your other income, and how you'll eventually sell, not on Stamp Duty alone.
That decision interacts with income tax, Corporation Tax and your eventual exit, where Capital Gains Tax comes in. If you're weighing up a future sale, our Capital Gains Tax calculator gives you a quick first estimate. For the structuring decision itself, it's worth a proper conversation with an accountant who works with landlords.
Frequently asked questions
Do I pay the 5% surcharge on a buy-to-let if I don't own my own home?
If the buy-to-let is the only residential property you'll own at the end of the purchase, and you're not buying it as an additional dwelling, the surcharge generally doesn't apply. But if you already own any other residential property anywhere in the world worth £40,000 or more, the higher rates usually do apply to the rental.
Is the Stamp Duty surcharge 3% or 5%?
It's 5% for purchases completing on or after 31 October 2024. It was 3% before that date. Older guides still quoting 3% are out of date.
Does the surcharge apply to properties under £40,000?
No. If the property you're buying costs less than £40,000, the higher rates don't apply. At or above £40,000, the full 5% surcharge applies to the whole price.
Can I get the surcharge refunded?
Only in one situation: where you paid it because you bought a new main home before selling your old one. Sell the old home within three years and claim within 12 months of the later of the sale date or your SDLT return filing date. A pure buy-to-let purchase is not refundable.
Do these rates apply in Scotland and Wales?
No. SDLT covers England and Northern Ireland. Scotland charges Land and Buildings Transaction Tax (LBTT) and Wales charges Land Transaction Tax (LTT), each with their own rates and additional-dwelling supplements.
