Understanding the Impact of the Increased SDLT Supplement
The Shift in Property Investment Landscape
Despite a shortage in rental accommodations, investing in residential property has become less attractive. In the Autumn Budget, the Chancellor announced an increase in the cost of purchasing additional residential properties by raising the Stamp Duty Land Tax (SDLT) supplement by two percentage points, from 3% to 5%, effective from 31 October 2024.
Overview of SDLT
SDLT is a tax on the chargeable consideration for land and property transactions in England and Northern Ireland. Different regions have different taxes: Land and Buildings Transaction Tax in Scotland and Land Transaction Tax in Wales.
Residential Property SDLT Rates
The amount of SDLT payable depends on the type of property—residential, non-residential, or mixed-use.
Current and Upcoming SDLT Thresholds
For residential properties, SDLT is levied on each slice of consideration above the residential threshold. Currently, this threshold is £250,000, but it will revert to £125,000 from 1 April 2025. From this date, a new rate will apply to the £125,000 to £250,000 band.
First-time buyers have a higher threshold, currently at £425,000, provided the purchase price is £625,000 or less. This threshold will decrease to £300,000 with a price cap of £500,000 starting 1 April 2025.
For second and subsequent residential properties, SDLT is charged on transactions of £40,000 or more at the standard residential rates plus a supplement, which increased from 3% to 5% on 31 October 2024. The reduction in the residential threshold from 1 April 2025 will increase the SDLT rate on the slice from £125,000 to £250,000 for these properties.
Detailed SDLT Rates
31 October 2024 to 31 March 2025
| Consideration | SDLT Rate | Second and Subsequent Residential Properties (Consideration £40,000 or more) |
|---|---|---|
| Up to £250,000 | 0% | 5% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5 million | 10% | 15% |
| Over £1.5 million | 12% | 17% |
First-time buyers purchasing a property costing up to £625,000 pay no SDLT on the first £425,000 and 5% on the remainder.
From 1 April 2025
| Consideration | SDLT Rate | Second and Subsequent Residential Properties (Consideration £40,000 or more) |
|---|---|---|
| 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% |
| Over £1.5 million | 12% | 17% |
First-time buyers purchasing a property costing up to £500,000 pay no SDLT on the first £300,000 and 5% on the remainder.
Financial Impact on Property Purchases
An individual buying an investment property for £700,000 would have faced an SDLT bill of £43,500 if the purchase was completed before 31 October 2024. Completing the purchase between 31 October 2024 and 31 March 2025 increases the SDLT to £57,500, an additional £14,000. If the purchase is completed after 1 April 2025, the SDLT rises to £60,000 due to the extra 2% on the £125,000 to £250,000 band.
SDLT for Non-Residential Properties
For non-residential properties, SDLT is not payable on the first £150,000. It is charged at 2% on the next £100,000 and 5% on the remaining balance. There is no SDLT supplement for multiple non-residential properties. These rates also apply to mixed-use properties, such as a shop with a flat above.
For further details, refer to the
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