Stamp Duty Land Tax (SDLT) is the single largest transaction cost when buying property in England. For international buyers, it's even heavier. Since April 2021, non-UK residents pay a 2% surcharge on top of standard rates. On a £2M property, that surcharge alone adds £40,000 to your bill. Here's exactly how the numbers work.
Standard SDLT Rates (2025)
SDLT is progressive. You pay different rates on different portions of the purchase price. The current residential rates for non-first-time buyers are:
- Up to £250,000: 0%
- £250,001 to £925,000: 5%
- £925,001 to £1,500,000: 10%
- Above £1,500,000: 12%
If you're buying an additional property (which includes any purchase where you already own residential property anywhere in the world), add 5% to each band. If you're a non-UK resident, add another 2% on top of that.
What International Buyers Actually Pay
Most international buyers hit both surcharges: the 5% additional property rate and the 2% non-resident rate. That means your effective SDLT bands look like this:
- Up to £250,000: 7% (0% + 5% + 2%)
- £250,001 to £925,000: 12% (5% + 5% + 2%)
- £925,001 to £1,500,000: 17% (10% + 5% + 2%)
- Above £1,500,000: 19% (12% + 5% + 2%)
Worked Examples
Purchase price: £500,000
- First £250,000 × 7% = £17,500
- Next £250,000 × 12% = £30,000
- Total SDLT: £47,500 (9.5% effective rate)
Purchase price: £1,000,000
- First £250,000 × 7% = £17,500
- Next £675,000 × 12% = £81,000
- Next £75,000 × 17% = £12,750
- Total SDLT: £111,250 (11.1% effective rate)
Purchase price: £2,000,000
- First £250,000 × 7% = £17,500
- Next £675,000 × 12% = £81,000
- Next £575,000 × 17% = £97,750
- Final £500,000 × 19% = £95,000
- Total SDLT: £291,250 (14.6% effective rate)
At £2M, you're paying nearly £300,000 just in stamp duty. That's a meaningful drag on returns, especially in a market where capital appreciation averages 3-5% annually.
First-Time Buyer Relief: Not for Non-Residents
UK first-time buyers get preferential rates: 0% on the first £425,000 for properties up to £625,000. This relief doesn't apply to non-UK residents, even if it's your first property purchase globally. If you're buying from abroad, you pay the full rate stack from day one.
There is one partial refund mechanism: if you become UK tax-resident within 12 months of purchase, you can claim back the 2% non-resident surcharge. This requires filing an amended SDLT return with HMRC and meeting the 183-day residency test. It's not automatic. You need to apply.
Strategies to Reduce the Bill
1. Establish UK residency first. If you plan to relocate, doing so before purchasing saves the 2% surcharge. On a £1M property, that's £20,000. The 183-day rule is straightforward, though you'll need to plan your tax position carefully.
2. Buying through a company. For properties above £500,000, a corporate purchase structure can make sense, but the trade-offs are complex. Companies pay 15% flat rate SDLT on residential properties over £500,000. However, if the property is used for a qualifying business purpose (rental, development, property trading), normal graduated rates apply. Annual Tax on Enveloped Dwellings (ATED) adds a yearly charge based on property value: £4,150/year for properties valued £500K-£1M, scaling up to £269,450/year above £20M.
3. Timing and negotiation. SDLT rates have changed multiple times in the last decade. The current non-resident surcharge was introduced in 2021. The additional property surcharge rose from 3% to 5% in October 2024. Buying during transitional periods or when rate reductions are announced can yield savings.
4. Negotiate the price down to offset. In a buyer's market, SDLT can be used as a negotiation lever. If a seller's property has been listed for 6+ months, a £500K asking price might settle at £475K, saving you both on price and on stamp duty (since SDLT is calculated on the final price).
The Bottom Line
SDLT is a material cost that must be factored into any London investment calculation. At effective rates of 9-15% for international buyers, it directly compresses first-year returns and extends your break-even timeline. Factor it in from day one, not as an afterthought.
Compare this to Dubai's 4% DLD transfer fee or New York's combined transfer taxes of 1.4-2.075%. London is one of the most expensive cities in the world to buy into, and SDLT is the primary reason.