Stamp Duty and Capital Gains Tax: The Full Property Tax Picture
SDLT is an allowable cost that reduces your CGT gain (confirmed by HMRC CG15180). With CGT at 18%/24% from April 2025 and SDLT surcharges up to 5%, understanding the combined tax cost is essential for investment property decisions.
Key Takeaways
- •SDLT is an allowable acquisition cost that increases your CGT base cost, reducing the chargeable gain
- •CGT rates from 6 April 2025: 18% (basic rate) and 24% (higher rate) on residential property
- •Annual CGT exempt amount: £3,000 per person (2025-26 and 2026-27)
- •FTB advantage: £0 SDLT on purchases up to £300,000 + Private Residence Relief = zero total tax
- •BTL combined burden: 5% SDLT + 24% CGT on gains = effective rate up to 40%+ on price increase
- •CGT on residential property must be reported and paid within 60 days of completion
In this article
SDLT Is an Allowable CGT Deduction (HMRC Confirmed)
HMRC's Capital Gains Manual at CG15180 confirms that stamp duty (including SDLT) paid on acquisition is an allowable cost for CGT purposes. It is added to the acquisition cost, which increases your base cost and reduces the chargeable gain on disposal.
This is not a planning loophole — it is the correct statutory treatment under TCGA 1992 s38. Every pound of SDLT paid reduces your CGT gain by one pound, saving 18p or 24p in CGT (at basic or higher rate) depending on your income.
Simple Example
Buy at £300,000 with £20,000 SDLT (5% surcharge) → base cost = £320,000. Sell at £400,000 → gross gain = £100,000. CGT base: £100,000 − £20,000 (SDLT) − £3,000 (annual exempt) = £77,000 taxable gain. CGT at 24% = £18,480.
Without the SDLT deduction: taxable gain = £97,000, CGT = £23,280. The SDLT deduction saves £4,800 in CGT (£20,000 × 24%).
CGT Rates from April 2025
The Autumn Budget 2024 changed CGT rates for residential property from 6 April 2025. The rates applying in 2025-26 and 2026-27 are:
| Taxpayer Status | CGT Rate (pre April 2025) | CGT Rate (from April 2025) |
|---|---|---|
| Basic rate taxpayer | 18% | 18% |
| Higher rate taxpayer | 28% | 24% |
| Additional rate taxpayer | 28% | 24% |
| Annual exempt amount | £6,000 (2023-24) | £3,000 (2025-26 and 2026-27) |
The higher rate reduction from 28% to 24% benefits landlords disposing of properties. However, the annual exempt amount has fallen from £12,300 (2022-23) to £3,000, meaning more of the gain is now taxable for all sellers. Main residence sales benefit from Private Residence Relief (PRR) — no CGT on a property that has been your only or main home throughout ownership.
Combined SDLT + CGT Calculator
Model the total tax burden from buying and selling a property. SDLT is automatically deducted from the CGT base cost as an allowable cost.
Combined SDLT + CGT Calculator
SDLT paid
£5,000
Gross gain
£100,000
CGT (after SDLT deduction)
£22,080
Total tax
£27,080
Worked Examples
Example 1: Standard buyer — main home
Buy: £300,000 | Sell: £400,000 | Standard buyer (main home)
SDLT: £5,000 (standard rate — £125k-£250k at 2%, £250k-£300k at 5%)
CGT: Property was main home throughout → Private Residence Relief → £0 CGT
Total tax: £5,000 | Effective rate on £100,000 gain: 5.0%
Example 2: BTL investor — higher rate taxpayer
Buy: £300,000 | Sell: £400,000 | BTL (5% surcharge) | CGT at 24%
SDLT: £20,000 (standard + 5% surcharge)
Gross gain: £100,000
CGT base: £100,000 − £20,000 (SDLT) − £3,000 (annual exempt) = £77,000
CGT at 24%: £18,480
Total tax: £38,480 | Effective rate on £100,000 gain: 38.5%
Example 3: FTB buying then selling main home
Buy: £280,000 | Sell: £380,000 | First-time buyer | CGT at 24%
SDLT: £0 (FTB relief — under £300,000 threshold)
CGT: Main home throughout → Private Residence Relief → £0 CGT
Total tax: £0 | Effective rate on £100,000 gain: 0.0%
FTB main home advantage: pay zero total tax on full price appreciation
Example 4: BTL basic rate taxpayer
Buy: £200,000 | Sell: £270,000 | BTL (5% surcharge) | CGT at 18%
SDLT: £13,500 (standard + 5% surcharge)
Gross gain: £70,000
CGT base: £70,000 − £13,500 (SDLT) − £3,000 (annual exempt) = £53,500
CGT at 18%: £9,630
Total tax: £23,130 | Effective rate on £70,000 gain: 33.0%
Total Tax at Every Price Point
Combined SDLT + CGT for a BTL investor at 24% higher rate, assuming a 33% gain on disposal and the £3,000 annual exempt amount.
| Buy Price | Sell (33% gain) | SDLT (5%) | Gross Gain | CGT (24%) | Total Tax | Eff. Rate |
|---|---|---|---|---|---|---|
| £150,000 | £200,000 | £8,000 | £50,000 | £9,360 | £17,360 | 34.7% |
| £200,000 | £266,667 | £11,500 | £66,667 | £12,520 | £24,020 | 36.0% |
| £250,000 | £333,333 | £15,000 | £83,333 | £15,680 | £30,680 | 36.8% |
| £300,000 | £400,000 | £20,000 | £100,000 | £18,480 | £38,480 | 38.5% |
| £400,000 | £533,333 | £30,000 | £133,333 | £24,080 | £54,080 | 40.6% |
| £500,000 | £666,667 | £40,000 | £166,667 | £29,680 | £69,680 | 41.8% |
| £750,000 | £1,000,000 | £65,000 | £250,000 | £43,680 | £108,680 | 43.5% |
CGT calculated on gain minus SDLT minus £3,000 annual exempt. SDLT at standard + 5% surcharge post April 2025. CGT rate 24% (higher rate).
First-Time Buyer Tax Advantage
First-time buyers purchasing a main home benefit from two powerful tax exemptions that, combined, produce the lowest possible total property tax burden:
FTB SDLT Relief
0% SDLT on purchases up to £300,000. 5% on amounts between £300,001–£500,000 (no FTB relief above £500,000). Saves up to £6,250 versus standard rates.
Private Residence Relief (PRR)
No CGT on gains from the sale of your only or main home that you have lived in throughout ownership. For a FTB who buys and lives in the property: total tax = £0 on the full appreciation.
This creates a stark contrast with BTL investors. A FTB buying at £280,000 and selling at £380,000 pays zero tax. A BTL investor making the exact same trade pays SDLT of approximately £18,750 plus CGT of approximately £18,480 = £37,230 total. The FTB advantage is worth over £37,000 on a £100,000 gain in this scenario.
Tax Reduction Strategies
1. Always deduct SDLT from CGT gains
Ensure your accountant adds SDLT paid to the base cost. This is frequently overlooked — particularly on the 5% surcharge element. On a £40,000 SDLT payment, omitting this deduction overstates CGT by £9,600 at the 24% rate.
2. Include all allowable costs in the base
Beyond SDLT, allowable costs also include: legal fees on purchase, survey costs, estate agent fees on sale, legal fees on sale, and capital improvement costs (not repairs or maintenance). Keep records from day one of ownership.
3. Transfer assets to a spouse before sale
Spouses and civil partners can transfer assets between them at no gain/no loss for CGT. Transferring part of a BTL to a basic-rate spouse before sale lets their share be taxed at 18% rather than 24%. Each spouse also has the £3,000 annual exempt amount, so a couple can shelter £6,000 of gains per year tax-free.
4. Use capital losses from other investments
Capital losses from shares, funds, or other assets in the same tax year (or carried forward) can be offset against property gains. Apply losses to property gains first — the 24% residential rate means losses save more tax here than on the 20% share CGT rate.
5. Time disposals across tax years
Completing near 6 April: if feasible, deferring completion into the new tax year gives a fresh £3,000 annual exemption and potentially different income levels affecting the CGT rate. On a large gain, this can save £720+ for a higher-rate taxpayer at minimal additional cost.
6. Nominate your main residence carefully
If you own two properties, nominating one as your main residence within 2 years of acquiring the second property can allocate PRR to whichever property generates the larger gain. The election can be changed during ownership. See our portfolio strategy guide for sequencing considerations.
Frequently Asked Questions
Can I deduct stamp duty from capital gains tax?
Yes. HMRC's Capital Gains Manual (CG15180) confirms that stamp duty (including SDLT) paid on acquisition is an allowable cost. It is added to your base cost, directly reducing the chargeable gain. For example, £20,000 SDLT on a £300,000 purchase raises your base cost to £320,000. On a sale at £400,000, the gain is £80,000 (not £100,000), saving £4,800 in CGT at 24%.
What is the total tax on buying and selling a property?
For a standard buyer (main home) who sells their only home: SDLT on purchase + zero CGT (Private Residence Relief). Total can be £0 for FTBs under £300k who sell their main home. For a BTL investor: SDLT at standard + 5% surcharge on purchase, then CGT at 18%/24% on the adjusted gain. On a £100,000 gain from a £300k property, the combined BTL tax is approximately £38,000–£40,000 — an effective rate of 38–40%.
How much tax overall do I pay on a buy-to-let property?
Total tax across the investment life includes: SDLT on purchase (one-off, 5% surcharge), income tax on rental profits every year, and CGT on the gain when you sell. For a higher-rate taxpayer buying at £250,000, holding 5 years with 5.5% gross yield, then selling at £300,000: SDLT = £18,750, income tax on rent approximately £16,500 (over 5 years after expenses), CGT approximately £6,000. Total approximately £41,250 on a £50,000 price gain — though this is offset by the £68,750 in annual rent collected over the period.
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Emma Richardson, MRICS
Chartered Surveyor & Property Tax Specialist
Emma Richardson is a RICS-qualified Chartered Surveyor with over 12 years of experience in UK property taxation. She founded Stamp Duty Calculator to help buyers understand the complex world of property transaction taxes.