How SDLT Works — Key Facts
- SDLT is a progressive tax — each rate applies only to the portion within that band
- You do not pay one flat rate on the entire purchase price
- The effective rate is always lower than the highest marginal rate
- Different rate tables apply for residential, first-time buyer, additional property and commercial purchases
- An SDLT return must be filed within 14 days of completion, even if no tax is due
- Your solicitor normally handles the calculation, filing and payment
The SDLT Banding System
SDLT works like income tax: your purchase price is divided into bands, and each band is taxed at a different rate. This is often misunderstood. Many buyers fear they will pay the top rate on the entire price, but that is not how the system works.
For a £400,000 standard residential purchase:
| Band | Taxable Amount | Rate | SDLT |
|---|---|---|---|
| £0 – £125,000 | £125,000 | 0% | £0 |
| £125,001 – £250,000 | £125,000 | 2% | £2,500 |
| £250,001 – £400,000 | £150,000 | 5% | £7,500 |
| Total | £10,000 |
The effective rate is 2.5% (£10,000 ÷ £400,000), not 5%. This distinction matters when budgeting.
First-Time Buyer Calculation
First-time buyers benefit from a higher nil-rate band of £300,000 on properties up to £500,000. For a £450,000 first-time buyer purchase:
| Band | Taxable | Rate | SDLT |
|---|---|---|---|
| £0 – £300,000 | £300,000 | 0% | £0 |
| £300,001 – £450,000 | £150,000 | 5% | £7,500 |
| Total | £7,500 |
A standard buyer on the same property pays £12,500 — the first-time buyer saves £5,000.
Additional Property Calculation
The 5% surcharge is added to each band. For a £400,000 additional property:
| Band | Taxable | Standard + 5% | SDLT |
|---|---|---|---|
| £0 – £125,000 | £125,000 | 0% + 5% = 5% | £6,250 |
| £125,001 – £250,000 | £125,000 | 2% + 5% = 7% | £8,750 |
| £250,001 – £400,000 | £150,000 | 5% + 5% = 10% | £15,000 |
| Total | £30,000 |
Commercial Property SDLT
Commercial (non-residential) property uses different rate bands. The additional property surcharge does not apply to commercial purchases.
| Up to £150,000 | 0% |
| £150,001 – £250,000 | 2% |
| Over £250,000 | 5% |
Filing and Payment
An SDLT return must be filed and the tax paid within 14 days of the completion date. Key points:
- Your solicitor or conveyancer files the return on your behalf
- Filing is required for all transactions above £40,000, even if no tax is due
- Late filing: automatic £100 penalty, increasing to £200 after 3 months
- Interest is charged on unpaid SDLT from the due date
- You receive an SDLT5 certificate confirming the transaction has been notified to HMRC
Related Guides
- Free SDLT calculator — calculate your stamp duty instantly
- Stamp duty rates 2026 — all current rate tables
- First-time buyer relief
- Stamp duty surcharge
- Commercial property SDLT
- Stamp duty exemptions
Frequently Asked Questions About SDLT Calculations
SDLT is progressive: different rates apply to different portions of the purchase price. On a £300,000 property: 0% on the first £125,000, 2% on £125,001–£250,000 (£2,500), and 5% on £250,001–£300,000 (£2,500) = £5,000 total. Use our free calculator for instant results.
No. Each rate applies only to the portion within that band. However, the additional property surcharge (5%) is added to each band across the entire price. The effective total rate is always lower than the highest marginal band rate.
The effective rate is total SDLT divided by purchase price. For a £400,000 property with £10,000 SDLT, the effective rate is 2.5%. This is always lower than the top marginal rate of 5% because the lower bands are taxed at 0% and 2%.
Commercial SDLT uses different bands: 0% up to £150,000, 2% on £150,001–£250,000, and 5% above £250,000. No additional property surcharge applies. See our commercial SDLT guide for details.
Yes. An SDLT return must be filed within 14 days of completion for any transaction above £40,000, even if the tax payable is £0. Failure to file incurs an automatic £100 penalty.