Do I pay the 5% surcharge if I'm replacing my main home?

undefined The replacement of main residence relief means that if you're moving home (not buying an additional property), the surcharge doesn't apply. You can even buy the new home before selling the old one — you pay the surcharge initially, then claim a refund once the old home is sold (within 36 months of the new purchase). The key test is whether the new property replaces your only or main residence. If you keep the old property and rent it out, you're buying an additional dwelling — the surcharge applies. Relevant legislation: FA 2003 Sch.4ZA Para.4 — replacement of main residence relief. The 36-month window for claiming a refund is in FA 2003 Sch.4ZA Para.4(3).. Example: A client bought a new £600,000 home before selling their old £400,000 home. They paid SDLT of £35,000 (including 5% surcharge). Six months later, they sold the old home and claimed a refund of £15,000 — the surcharge portion. Common mistake: Not claiming the surcharge refund after selling the old home. Many buyers pay the surcharge upfront and forget to claim the refund within the 36-month window.

How much is SDLT on a £500,000 buy-to-let after April 2025?

undefined On a £500,000 buy-to-let after 1 April 2025: 5% on £0-£250,000 = £12,500, plus 10% on £250,001-£500,000 = £25,000. Total SDLT = £37,500. Before April 2025 (3% surcharge), it was £27,500. The April 2025 increase adds £10,000 on a £500,000 property. On a £1M buy-to-let, the increase is larger: from £71,250 to £91,250 — a £20,000 increase. Relevant legislation: FA 2003 Sch.4ZA — additional dwelling surcharge. FA 2025 — increase to 5% from 1 April 2025.. Example: A £500,000 buy-to-let after April 2025: SDLT = £37,500 (with 5% surcharge). A £1M buy-to-let: SDLT = £91,250. A £2M buy-to-let: SDLT = £251,250. Common mistake: Using pre-April 2025 calculators that still show the 3% surcharge. Always confirm the SDLT calculation reflects the current 5% surcharge for transactions completing on or after 1 April 2025.

SDLT Advice

SDLT Second Home Surcharge: The 5% Additional Rate

Understanding the additional dwelling surcharge (ADS) on SDLT for second homes and buy-to-let properties, including the 2025 rate increase to 5%.

Quick Answer

From 1 April 2025, the SDLT additional dwelling surcharge increases from 3% to 5% on top of standard residential rates. This applies to second homes, buy-to-lets, holiday homes and any additional residential property. On a £500,000 second home, SDLT increases from £35,000 (3% surcharge) to £45,000 (5% surcharge) — an increase of £10,000. There are reliefs and exemptions available, including replacement of main residence and multiple dwellings relief.

The April 2025 Surcharge Increase

From 1 April 2025, the additional dwelling surcharge (ADS) increases from 3% to 5%. This means the total SDLT rates on additional residential properties become:

5% on the first £250,000 (was 3%)
10% on £250,001-£925,000 (was 8%)
15% on £925,001-£1,500,000 (was 13%)
17% on above £1,500,000 (was 15%)
The increase applies to transactions completing on or after 1 April 2025

What Triggers the Surcharge?

The surcharge applies when you purchase an additional residential property and you already own (or are simultaneously purchasing) another residential property, and you're not replacing your main residence. Key triggers:

Buying a buy-to-let investment property
Purchasing a second home or holiday home
Buying a property for a family member
Purchasing through a company (companies always pay the surcharge on residential property)
Buying a property to renovate and let (even if you plan to sell quickly)

Exemptions and Reliefs

Several reliefs can reduce or eliminate the surcharge:

Replacement of main residence: if you're selling your current main home and buying a new one, the surcharge doesn't apply (but you must sell the old home within 3 years, or within 36 months of the new purchase)
Multiple Dwellings Relief (MDR): if the property contains multiple self-contained dwellings, SDLT is calculated per dwelling (but MDR was restricted from June 2024)
Mixed-use property: if the property has commercial and residential elements, non-residential rates apply (no surcharge)
Corporate vehicles: some transactions involving property developers may qualify for relief
Properties under £40,000: exempt from the surcharge

Relevant Legislation

Additional dwelling surcharge: FA 2003 Sch.4ZA. The 5% rate (from 1 April 2025) is introduced by FA 2025. Replacement of main residence relief: FA 2003 Sch.4ZA Para.4. MDR: FA 2003 Sch.6B (restricted from 1 June 2024).

Practical Example

A client purchasing a £750,000 buy-to-let in May 2025 faced SDLT of £50,000 (residential rates + 5% surcharge). We identified that the ground floor was used as a commercial unit, making the property mixed-use. Reclassifying as non-residential reduced SDLT to £29,500 — a saving of £20,500.

Common Mistake

Not considering whether a property might qualify as mixed-use. If a property has any genuine commercial element (a shop, office, or agricultural land), the entire transaction may qualify for non-residential SDLT rates — which are significantly lower and don't attract the surcharge. Many conveyancers simply apply the residential rates without checking.

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