UK Stamp Duty Land Tax: How Residential SDLT Is Calculated

What Is Stamp Duty Land Tax?

Stamp Duty Land Tax (SDLT) is a tax on the purchase of land and buildings in England and Northern Ireland. It is charged on the price you pay for a residential property, and it is payable by the buyer, not the seller. The tax is progressive: you pay a rate on each portion of the price that falls within a band, not a single rate on the whole price. This banded structure is the single most important thing to understand, because it means the marginal rate on the top slice of the price is far higher than the average rate on the whole purchase.

The bands below reflect the current standard residential rates. They apply to a single residential property bought by someone who already owns a home. Buyers of additional properties, non-UK residents, and first-time buyers face different treatment, covered later in this guide.

The Residential SDLT Bands

Purchase price portion	SDLT rate
Up to £125,000	0%
£125,001 to £250,000	2%
£250,001 to £925,000	5%
£925,001 to £1.5 million	10%
Above £1.5 million	12%

Because the tax is banded, only the money above each threshold is taxed at the higher rate. A property priced at £300,000 does not pay 5% on the whole £300,000. It pays 0% on the first £125,000, 2% on the next £125,000, and 5% on the remaining £50,000.

Worked Example

A buyer purchases a home for £400,000.

• 0% on the first £125,000 = £0
• 2% on the next £125,000 (£125,001 to £250,000) = £2,500
• 5% on the next £150,000 (£250,001 to £400,000) = £7,500
• Total SDLT = £10,000

Now consider a purchase at £1,000,000.

• 0% on the first £125,000 = £0
• 2% on £125,001 to £250,000 (£125,000) = £2,500
• 5% on £250,001 to £925,000 (£675,000) = £33,750
• 10% on £925,001 to £1,000,000 (£75,000) = £7,500
• Total SDLT = £43,750

Notice that the £1,000,000 property pays an average rate of about 4.4%, even though its top band is 10%. The banded structure keeps the average rate well below the marginal rate on the highest slice.

First-Time Buyer Relief

First-time buyers who purchase their first home, and who have never owned a property anywhere in the world, qualify for reduced rates. The relief raises the zero-rate band and lowers the rate on the next slice:

Purchase price portion	SDLT rate
Up to £300,000	0%
£300,001 to £500,000	5%
Above £500,000	Standard rates apply

The relief is not available on properties priced above £500,000. Above that threshold, the standard bands apply to the whole price, so a first-time buyer purchasing at £600,000 pays standard rates on the entire amount, not just the portion above £500,000.

Worked Example

A first-time buyer purchases a home for £450,000.

• 0% on the first £300,000 = £0
• 5% on the next £150,000 (£300,001 to £450,000) = £7,500
• Total SDLT = £7,500

Without the relief, the same £450,000 purchase would attract 2% on the £125,000 above the £125,000 threshold plus 5% on the £200,000 above £250,000, or £12,500. The relief saves this buyer £5,000.

Additional Property Surcharge

Buyers of additional residential properties, such as a second home or a buy-to-let, pay a 5% surcharge on top of the standard rate at every band. The surcharge applies to the whole price, band by band, so a £400,000 second home attracts 5% on the entire purchase price in addition to the standard banded tax.

• Standard banded tax on £400,000 = £10,000
• 5% additional-property surcharge on £400,000 = £20,000
• Total SDLT = £30,000

The surcharge is a significant cost on any additional purchase, and it is one of the main reasons buyers should model the full SDLT before committing to a second property.

Non-UK Resident Surcharge

Buyers who are not resident in the UK for tax purposes pay an additional 2% surcharge on top of the standard rate at every band. Like the additional-property surcharge, it applies to the whole purchase price, band by band, and is additive to any other surcharge that applies.

Input Definitions

• Purchase price: The price paid for the property, used to determine which bands apply. The tax is calculated on the price, not on the deposit or the mortgage amount.
• Buyer status: Whether the buyer is a first-time buyer, an existing owner, or buying an additional property. This determines whether relief or the surcharge applies.
• Property type: Residential versus non-residential. This guide covers residential rates; commercial and mixed-use properties use a different band structure.

Important Caveats

Rates Change

SDLT rates and thresholds have changed repeatedly in recent years, and they are set by the government in the Budget. The bands in this guide reflect the current statutory rates. Before relying on a figure, confirm the current thresholds, because a change in the zero-rate band can move the tax on a given price by thousands of pounds.

Scotland and Wales Differ

SDLT applies only in England and Northern Ireland. Scotland uses Land and Buildings Transaction Tax (LBTT) and Wales uses Land Transaction Tax (LTT), each with its own bands and rates. A buyer purchasing in Edinburgh or Cardiff should use the relevant devolved tax, not the SDLT bands above.

The Surcharge Is Not Optional

The 5% additional-property surcharge applies to most second homes and buy-to-lets, with limited exceptions such as replacing a main residence. Buyers who sell their previous main residence within a set period can reclaim the surcharge, but the timing rules are strict and the reclaim is not automatic. Non-UK residents face an additional 2% surcharge on top of any other rates that apply.

Finance Information Disclaimer

This guide is provided for general informational and educational purposes only. It is not financial, investment, legal, or tax advice. SDLT rates, thresholds, and reliefs change and vary by jurisdiction and individual circumstances. Always consult a licensed conveyancer, tax adviser, or your solicitor before completing a property purchase.

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