Stamp duty land tax: Current situation and developments since 2020

Stamp duty land tax (SDLT) is a charge on the purchase of residential property (exclusively used as a dwelling) as well as the purchase of commercial property. The property buyer is liable to pay SDLT, which is administered by HM Revenue and Customs (HMRC).

SDLT only applies to England and Northern Ireland; equivalent taxes exist in Scotland (the land and buildings transaction tax) and in Wales (the land transaction tax).

How does SDLT apply to residential property?

SDLT is charged on a ‘slice’ basis. This means that different rates apply to different portions of the overall property price. This is a similar design to that of income tax. The first ‘slice’ of the property price (currently £125,000) is charged at a 0% rate, meaning no SDLT is payable up to that amount. This is known as the nil-rate band (NRB).

Additional charges and reliefs available

There are reliefs available for first-time buyers (known as the first time buyers’ relief).

Those purchasing an additional property may be liable for an additional SDLT rate of 5%.

Non-residents may also be liable to surcharges on top of regular SDLT rates.

Recent changes to the main SDLT rates

• As Chancellor, Rishi Sunak introduced an SDLT relief to stimulate the housing market during the Covid-19 pandemic. This temporary SDLT relief applied between 8 July 2020 and 30 September 2021.
• In September 2022, then Chancellor Kwasi Kwarteng announced a permanent reduction to SDLT, effective 23 September. In particular, the first ‘slice’ of the property price charged 0% SDLT was £250,000, rather than £125,000.
• the subsequent Chancellor, Jeremy Hunt, announced that the reduction would become temporary in the Autumn Statement in November 2022. These rates applied until 31 March 2025.
• The Labour government’s first budget in October 2024 also included changes to SDLT rates. Chiefly, the government increased the rates of SDLT on the purchase of additional dwellings by 2 percentage points, effective 31 October 2024.

Property transaction taxes in Scotland and Wales

SDLT is a devolved tax, and only applies to property transactions in England and Northern Ireland. Scotland replaced SDLT with the land and buildings transaction tax (LBTT) in 2015, and Wales with the land transaction tax (LTT) in 2018. The two devolved taxes share most features with SDLT, but different rates and thresholds apply. Neither LBTT nor LTT have a non-resident surcharge as SDLT does, and there is no relief for first time buyers in Wales.

Current SDLT, LBTT, and LTT rates

The table below shows the current rates of SDLT, LBTT, and LTT.

Proposals for reform

Although SDLT reliefs were welcomed by MPs and commentators alike, – particularly during the Covid-19 pandemic – most economists say that the design of SDLT is detrimental to the housing market and to labour mobility, regardless of where the rates are set. For example, the Institute for Fiscal Studies has consistently called for the tax to be abolished. The Treasury Committee, in an inquiry on tax after coronavirus (PDF), said in its report that SDLT should be treated as a priority for reform after the pandemic.

Although most of the existing commentary focuses on SDLT in England and Northern Ireland, similar considerations also apply to LBTT in Scotland and LTT in Wales because the taxes are so similar.

Proposals for reform

Although SDLT reliefs were welcomed by MPs and commentators alike, – particularly during the Covid-19 pandemic – most economists say that the design of SDLT is detrimental to the housing market and to labour mobility, regardless of where the rates are set. For example, the Institute for Fiscal Studies has consistently called for the tax to be abolished. The Treasury Committee, in an inquiry on tax after coronavirus (PDF), said in its report that SDLT should be treated as a priority for reform after the pandemic.

Although most of the existing commentary focuses on SDLT in England and Northern Ireland, similar considerations also apply to LBTT in Scotland and LTT in Wales because the taxes are so similar.

In 2025, the Conservative Party announced that it would abolish SDLT for purchases of primary residences by UK residents. The government has said it does not intend to abolish SDLT, citing the amount of revenue it raises for the public finances.