When you purchase an investment buy-to-let, you’ll need to pay stamp duty on that property that is similar to the one you would pay on a residential property you intend to live in.
The stamp duty on buy-to-let properties is tiered, just like residential stamp duty and income tax rates. For anyone new to buy-to-let, it’s essential to factor in the additional costs of stamp duty into your budget to understand the true purchase costs of your property.
If you are wondering how much stamp duty you will have to pay on a buy-to-let property and how it works, keep on reading.
Do you have to pay stamp duty on buy-to-let properties in 2022?
The short answer is yes. If the property is over £40,000 or the property purchase will result in you owning more than one property, you’ll need to pay a stamp duty surcharge. The surcharge is a minimum of 3% extra on top of your standard stamp duty bill.
The rates payable will vary depending on whether you live in England, Wales, Scotland, or Northern Ireland.
The only properties that are exempt from stamp duty are as follows:
- The properties worth less than £40,000.
- Caravans, mobile homes, and houseboats are exempt from additional stamp duty.
- There may also be an exception if the buy-to-let is the first and only property you will own.
Some reliefs are available in the instance of multiple dwellings, where several smaller properties are purchased as part of one transaction. For more information on reliefs in these cases, we recommend contacting a property expert for further guidance.
Why is the stamp duty on buy-to-let properties higher than on residential properties?
Back in 2015, the government announced that the buy to let investors would need to pay an additional 3% minimum stamp duty on their buy-to-let properties. At the time, the then chancellor George Osbourne stated: “People buying a home to let should not be squeezing out families who can’t afford to buy a home.” The money raised as a result of the increase was to be put back into the property market to build more affordable homes.
If you are new to the world of buy-to-let properties, you should check out our definitive guide that covers everything you need to know about buying a property to let in the UK.
How much stamp duty will I have to pay on my buy-to-let property in 2022?
The answer to this question depends on your current circumstances and the property value. If you are a first-time buyer, you will benefit from reduced stamp duty rates as you would for a residential property (stamp duty exempt for any property valued under £500,000 and 5% on any property above this value).
Although first-time buyers are exempt from standard stamp duty rates, they will still have to pay the buy-to-let property surcharge starting at 3% in England for any property under £125,000.
The table below shows the 2022 stamp duty rates depending on which region of the UK you purchase property within.
England and Northern Ireland
|
Purchase Price |
Standard Stamp Duty Rate | Stamp duty rate applicable to additional properties |
| £125,000 or less |
0% |
3% |
| £125k- £250k |
2% |
5% |
| £250k – £925k |
5% |
8% |
| £925,001 – £1.5 million |
10% |
13% |
| Above £1.5 million |
12% |
15% |
Scotland (LBTT rates)
| Purchase Price | Standard Stamp Duty Rate | Stamp duty rate applicable to additional properties |
| £145,000 or less |
0% |
4% |
| £145,001 – £250,000 |
2% |
6% |
| £250,001 – £325,000 |
5% |
9% |
| £325,001 – £750,000 |
10% |
14% |
| Above £750,000 |
12% |
16% |
Wales
| Purchase Price | Standard Stamp Duty Rate | Stamp duty rate applicable to additional properties |
| £180,000 or less |
0% |
4% |
| £180,001 – £250,000 |
3.5% |
7.5% |
| £250,001 – £400,000 |
5% |
9% |
| £400,001 – £750,000 |
7.5% |
11.5% |
| £750,000 – 1.5m |
10% |
14% |
| Over £1.5m |
12% |
16% |
How to Calculate Stamp Duty on a Buy-to-Let Property
To work out the total amount of stamp duty you need to pay on your buy-to-let, you’ll need to combine both the tiers of the additional property surcharges as shown in the example below.
The Property purchase price is £250,000 in England.
| Purchase bands applicable | Percentage rate (%) | SDLT due (£) |
| Up to 125,000 |
3 |
3,750 |
| Above 125,000 and up to 250,000 |
5 |
6,250 |
Total stamp duty payable = £10,000
To find out the cost of stamp duty on your next buy-to-let property you can use the calculator on the HMRC website.
Can I Claim Back Stamp Duty on a Buy-to-Let?
Unfortunately, the cost of stamp duty cannot be claimed back as a business expense on a buy-to-let property as it is considered part of the purchasing cost. Only expenses that have been incurred solely as a result of renting out the property can be reclaimed. For example, property repairs and maintenance, management fees, and utility costs.
Final Word
When you are running the numbers to determine if a buy-to-let property investment is suitable for you, it’s essential to factor in the stamp duty surcharges you will need to pay along with being aware of any reliefs that may apply to your circumstances. If you are unsure or have any questions regarding stamp duty, we recommend that you consult a financial advisor who will be able to advise on your individual circumstances.
For more information on the ins and outs of buying a buy-to-let property, don’t forget to check out our definitive guide which covers everything you need to know before taking the plunge.
