Buyers budget for the deposit and treat stamp duty as an afterthought. It is the other way round: SDLT is the payment that most often changes which mortgage product you end up on, because it takes cash out of the deposit and pushes the loan-to-value into a more expensive band.
The rates, briefly
Standard residential SDLT in England since April 2025: 0% to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5m and 12% above.
First-time buyers pay nothing up to £300,000 and 5% between £300,001 and £500,000, with no relief at all above £500,000 — a cliff edge worth watching at the top of that range.
Additional dwellings — second homes, buy-to-lets, and any purchase by a company — carry a 5% surcharge on top of every band, in force since 31 October 2024. A company buying a single dwelling for more than £500,000 can face a flat 17% unless a relief applies, most commonly the property rental business relief.
Wales and Scotland operate their own taxes with different rates and thresholds.
Why it cannot go on the mortgage
Lenders advance against the property, not against your transaction costs. SDLT, legal fees and moving costs are all funded from your own resources. That is not a rule brokers can negotiate around — the valuation sets the security and the loan is a percentage of it.
The practical consequence is arithmetic. Suppose you have £70,000 saved and you are buying at £400,000 as a home mover:
- SDLT at standard rates on £400,000 is £10,000.
- Legal fees, survey and moving might be £3,000.
- That leaves £57,000 as deposit — 14.25%, so you are borrowing at just under 86%.
Had you not needed the SDLT, £67,000 would have been 16.75% and you would have been comfortably inside the 85% band, where pricing is better. A single tax payment has moved you into a worse product tier.
Now do it as a buy-to-let
Same £400,000 property, bought through a company. SDLT with the 5% surcharge is £30,000 — £6,250 in the first band, £8,750 in the second and £15,000 in the third. Add fees and you need over £33,000 in cash before a penny of deposit.
Investors consistently under-budget this. A 25% deposit on £400,000 is £100,000; the real day-one requirement is closer to £135,000.
Funding routes when the cash is short
Raise it from another property. A further advance or second charge against an existing property you own is usually the cheapest source. It is secured borrowing at mortgage rates rather than unsecured at personal-loan rates.
Bridging to cover the surcharge, then reclaim. Where you are buying before selling your existing home, you pay the 5% surcharge on the new purchase and can reclaim it if you sell your previous main residence within 36 months. A bridge can fund that surcharge and be repaid from the sale and the refund. The reclaim is a real relief with a real deadline — the claim is made to HMRC and the timing is strict, so diarise it.
Gifted deposits. Family gifts are widely accepted but need a signed gift letter confirming the money is a gift, not a loan, and that the donor retains no interest. A “loan” from family changes affordability, because it is a commitment; be straight about which it is.
Delay the purchase. Unfashionable advice, but sometimes right. Stretching to the last pound to complete leaves nothing for the boiler that fails in month three.
Two timing points
The SDLT return and payment are due within 14 days of completion. Your solicitor normally handles the filing, but the money has to be with them beforehand.
And where VAT is charged on a commercial purchase, SDLT is calculated on the VAT-inclusive figure — an easy way to be several thousand pounds short at completion if it was not priced in.
Budget it properly from the start
Before you offer, work out the SDLT figure, subtract it and your other costs from your available cash, and see what deposit is genuinely left. Then look at products against that loan-to-value. Doing it in that order occasionally changes the price you are willing to offer — which is exactly the point.
Want the real day-one cash figure for a purchase you are considering? Send us the price and the circumstances and we will work it through with you.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Giles Finance is authorised by the Financial Conduct Authority (No. 726857) to transact regulated mortgages. Giles Finance is a trading style of Giles Finance & Consultancy Services. This article is general information, not advice; the right answer depends on your circumstances.