Stamp Duty Land Tax on acquisition of residential properties

10 May 2022 Dean Castledine View all News

Over the past few years, the Government has made changes to the tax system to make investment in residential property less attractive. 

They introduced the Stamp Duty Land Tax surcharge for purchases of additional residential properties. This is an additional 3% payable on the entire consideration and in addition to the usual SDLT which would be due on the purchase Generally, this surcharge is payable on the purchase of a second or subsequent property.

Although it would appear that landlords are mostly affected by these rules, they are a lot more widespread that what you may first think.

Who is affected?

It is not only individuals who are subject to the 3% surcharge. The following are also affected:

  • Individuals (including joint owners),
  • Trustees,
  • Personal representatives,
  • Partners in a partnership (including limited liability partnerships),
  • Companies.

The purchase of any residential property which is not going to be the purchaser’s main residence is potentially subject to the additional 3% Stamp Duty Land Tax charge. In the case of anyone other than an individual, the purchase of any residential property could be subject to the surcharge.

Spouses and Civil Partners

Unusually, spouses and civil partners are considered as ‘one person’ for this purpose so if one spouse owns a property in their sole name and the new home is to be purchased in the name of the other spouse, that property purchase will be subject to the 3% surcharge.

What Type of Property is affected?

Any residential property, but excluding a mixed-use property, i.e. one which has an element of commercial use, such as a shop with a flat above it.

Commercial properties are not affected by the surcharge.


The 3% surcharge would not apply in the following circumstances:

  • The total consideration is below £40,000
  • At the end of the day when the purchase completes, the purchaser only owns one property,
  • Transfers between spouses/civil partners who are living together.


What if I am replacing my home?

It is often the case that an individual may either:

  1. Purchase a new home sometime after they have sold their previous home, or
  2. They buy a new home before they sell the old one.

Scenario 1

The individual should not be subject to the 3% surcharge on the purchase of their new home if they purchase their new home within three years of the sale of the original property. This is irrespective of what other properties they may own.

If the purchase of the new home is more than three years after the sale of the old home and the individual owns other residential property, the surcharge is likely to apply.

Scenario 2

The 3% surcharge would apply to the purchase of the new home. However, if they were to dispose of their previous home with three years of the purchase of the new one, they can apply to HMRC to obtain a refund. The application for the refund must be made within a year of the sale of the previous home or within a year of the purchase of the new residence (whichever is the later).


We can help with planning

The legislation has been purposefully drafted very widely to catch as many transactions as possible. However, if you are thinking of purchasing a property, please get in touch and we can look at any pre-purchase planning to see what options are available to you.

Contact our team


Tax-Saving Tips for Individuals and businesses

Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid.

If you're looking for ways to reduce your liability, claim your copy and start planning how you could pay less tax.

Download Now

Capital Gains Tax on Residential Properties

From April 2020, new rules to report residential property disposals were introduced by the Government.

These rules meant that any disposals of residential property which generated a CGT liability needed to be reported and the tax paid within 30 days of completion. This was a significant reduction from the potential 22 months under the previous rules.

Learn more

Free Consultation

Simply complete the form and one of our team of specialists will be in touch within one working day.

Begin your journey with us today

Drop us a line today to see how we can help your business thrive