Love, marriage and SDLT on additional properties

Stamp Duty Land Tax (SDLT) these days is nothing if not complex.

A few years ago, if you bought a residential property for under £125,000, you didn’t pay any SDLT. It didn’t matter whether the property was your main home or an additional property, such as a second home or a buy-to-let rental.

Whatever you bought the property for, you’d only pay SDLT over the £125,000 threshold. The more expensive the property, the higher the SDLT bill – up to a maximum of 15%.

SLDT and buy-to-let

Since then, the system has changed. In 2016, the government introduced higher rates of SDLT for additional properties. The higher rates are essentially a 3% surcharge. This surcharge remained when the SDLT bands changed in late 2022. In her first Labour Budget, Chancellor Rachel Reeves increased this surcharge from 3% to 5% effective from 30 October 2024.

Until 1 April 2025, if you buy a property under £250,000, you pay 0% SDLT if it’s your main home. If it’s an additional property, you now pay 5%. From 1 April 2025 that figure of £250,000 reverts to the old threshold of £125,000 meaning (in addition to the 5% if it’s an additional property) you pay 2% on any amount between £125,001 and £250,000.

Moving up the scale, from April 25 will pay 5% on anything you spend on a main residence between £250,001 and £925,000. If it’s an additional property you now pay 10%.

If you’d like to see all of the latest SDLT rates for additional properties, visit this page.

SDLT and marriage

Stamp Duty gets very complicated in certain circumstances. This is particularly so if you are married or in a civil partnership (or even move in with someone).

Say a couple are getting married, and one partner owns a property and wants to keep it and let it out. If the couple then buy a new home, if the property-owning half of the arrangement has their name on the deeds, they then have to shell out SDLT.

HMRC gives this example:

1. Partner A owns a £700,000 property with an outstanding mortgage of £600,000
2. They transfer half the property to Partner B
3. Partner B takes on 50% of the mortgage (£300,000)
4. HMRC wants SDLT on the amount of ‘chargeable’ consideration given
5. They therefore pay 0% of £250,000 and 5% of the remaining £50,000 (£2,500 in total). This will increase from 1 April 2025 to 0% on the first £125,000, 2% on the next £125,000 and 5% on the remaining £50,000 (£5,000 in total).

Can you avoid SDLT?

Unfortunately, you can’t wangle these SDLT rules by electing which property you live in as your main residence. For SDLT, unlike Capital Gains Tax, you simply can’t do it.

That said, there is one strange loophole. According to HMRC, you don’t have to pay SDLT if you transfer an interest in a property as part of an agreement or court order because you’re:

• Divorcing
• Dissolving a civil partnership
• Annuling your marriage
• Legally separating

So, to return to the above example, if Partner A and Partner B got divorced and Partner A agreed to transfer half the property to Partner B, the latter would pay nothing in SDLT. That’s a saving of £2,500 (£5,000 from April 2025) – and one that could be higher if the property was worth more.

The Government says it wants to support couples. But under this system, the biggest winners are those who are not married, happen to own property outright and then get married.

Whether it encourages any couples to get divorced and then re-marry to maximise their SDLT gains remains to be seen – but the fact it is even possible is sure to make many of us keep scratching our heads.

At THP we now have a tax team that specialises in helping Landlords minimise their tax liabilities. Click here to find out more!