Buying any residential property beyond your only home now carries a 5% surcharge on the whole price — raised from 3% at the October 2024 Budget, stacked on top of the standard bands, and joined by a further 2% for non-residents. On a £400,000 second property the surcharge alone is £20,000. This guide covers who pays, who escapes, the worked numbers, the 36-month refund for movers, and the corporate and holiday-let angles.
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The 5% Surcharge: Who Pays It and Who Escapes
The higher rates apply when, at the end of completion day, you own an interest in more than one dwelling and are not replacing your main residence — anywhere in the world, so an apartment abroad counts. Married couples and civil partners are treated as one unit, and a property held by your minor child counts as yours. The test is mechanical; the planning happens before completion, not after.
From 3% to 5%: The October 2024 Jump
The Autumn Budget raised the additional-property surcharge from 3% to 5% for completions from 31 October 2024, and the April 2025 threshold reversion compounded it — the standard bands beneath the surcharge got tighter at the same time. HMRC's own quarterly statistics show the exchequer effect: receipts from additional-dwelling transactions rose 46% year-on-year to £1.228 billion in Q1 2025 even as liable transactions grew far more slowly.
Surcharge at 5%: Worked Examples
| Price | Old 3% Element | 5% Element Now | Increase |
|---|---|---|---|
| £250,000 | £7,500 | £12,500 | £5,000 |
| £400,000 | £12,000 | £20,000 | £8,000 |
| £600,000 | £18,000 | £30,000 | £12,000 |
| £1,000,000 | £30,000 | £50,000 | £20,000 |
Transitional Protection
Who Kept the 3% Rate
Contracts exchanged on or before 30 October 2024 kept the 3% rate even when completion came later, provided the contract was not varied or assigned afterwards. The window is history now, but it still matters in disputes about completions from that era — and it is the template for how future rate rises will likely be handled.
When the Surcharge Does Not Apply
- Replacing your main residence — selling the old home and buying the new one, even while owning other property.
- Transactions under £40,000, and caravans, mobile homes and houseboats.
- Mixed-use purchases taxed at non-residential rates — genuinely mixed, not a flat with a paddock argument.
- Six or more dwellings in one transaction, which may be treated as non-residential.
- Buying out a spouse or civil partner's share in the shared home.
Holiday Homes and Short-Term Lets
Every holiday home and short-term let triggers the surcharge — running it as a business changes nothing for SDLT. With the furnished holiday lettings tax regime abolished from April 2025, the acquisition surcharge now sits alongside diminished running-cost advantages, and the honest appraisal of a holiday-let purchase starts £12,500-plus behind where it started two years ago on a mid-priced property.
Running the Investment Numbers
The surcharge is a capital cost recovered, if at all, through yield and growth: 5% of the price is roughly a year's gross rent on many lets. Investors comparing markets should also count local licensing, second-home council tax premiums — now up to double in many areas — and the registration schemes arriving for short lets. None of these kills a good purchase; all of them punish an unpriced one.
Buy-to-Let: The Sector Squeeze
For landlords the surcharge lands on top of the sector's structural changes — restricted interest relief, the Renters' Rights Act compliance load, and the PRS database ahead. The arithmetic that still works tends to involve stronger yields, longer horizons, or purchases where the buyer adds value — and it is arithmetic worth running with the full 5% in the acquisition column, not the 3% many older spreadsheets still carry.
Supply-Side Effects
Policy-watchers will argue about whether the surcharge deters investment or merely taxes it; HMRC's transaction data shows additional-dwelling purchases continuing at scale, with the tax collected rising far faster than volumes. For an individual buyer the macro debate matters less than the micro fact: the surcharge is now the single largest closing cost on most investment purchases.
Corporate Purchases: The 17% Flat Rate
A company buying a dwelling for more than £500,000 pays a flat 17% on the whole price — raised from 15% at the same Budget — unless a relief such as genuine rental business applies, in which case the company pays the surcharged progressive rates instead. Enveloping also invites the annual ATED charge, covered in our ATED guide. The corporate wrapper is now a tax decision first and a privacy decision second.
How We Got Here
The Stamp Duty Holiday Legacy
The 3% surcharge arrived in 2016; the pandemic-era stamp duty holiday briefly made even surcharged purchases cheap, pulling investor demand forward; and the 2024 Budget's move to 5% completed the policy arc — from discouraging second-home ownership at the margin to taxing it as a priced privilege. Each step was announced with immediate or near-immediate effect, which is the practical lesson: surcharge planning built on "before the next Budget" timing carries real risk.
Market Impact and Planning
Movers who buy the new main home before selling the old one pay the 5% up front and reclaim it in full if the previous main residence sells within 36 months of completion. Claims go to HMRC online or by post, and the window can extend for exceptional circumstances outside your control. Budget the cash flow, diarise the deadline, and treat the refund as the plan — not a hope.
Regional Notes
The surcharge is England and Northern Ireland's: Scotland's ADS runs at 8% under LBTT and Wales charges its own higher rates under LTT, both on different thresholds. Cross-border buyers comparing a Northumberland cottage with a Borders one are comparing different tax systems, not just different prices — check the right calculator before offering.
Frequently askedQuestions about the additional property surcharge
What is the additional property surcharge now?
5% of the entire purchase price, on top of standard SDLT bands, for completions since 31 October 2024. A non-resident buyer adds a further 2%, making the combined surcharge 7% before the standard rates are even counted.
Do I pay the surcharge when moving house?
Not if you are replacing your main residence in the same transaction chain. If you buy the new home before selling the old one, you pay the 5% and reclaim it in full once the previous home sells within 36 months.
Does a holiday home or holiday let pay the surcharge?
Yes — every additional dwelling does, business or not, and the furnished holiday lettings tax advantages ended in April 2025. Factor the 5%, local licensing and council tax premiums into the purchase appraisal together.
What if I own a property abroad?
It counts. Owning any dwelling anywhere in the world means a UK purchase that is not replacing your main residence attracts the higher rates — the test looks at worldwide interests, spouses jointly, and even minor children's holdings.
When does a company pay 17%?
On any dwelling over £500,000, unless a relief such as a genuine rental business applies — in which case the company pays the surcharged progressive rates instead. Add ATED's annual charge to the appraisal before choosing the corporate route.
Are any purchases exempt from the surcharge?
Under-£40,000 transactions, caravans and houseboats, genuine mixed-use purchases taxed at non-residential rates, six-plus dwelling deals, and main-residence replacements. Each has conditions — the mixed-use route in particular attracts HMRC attention when stretched.
Tell us what you are buying, what you already own and whether a sale is in the chain. We will tell you whether the surcharge applies, what the refund position is, and whether any structure honestly changes the answer.
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