Which tax applies
Stamp Duty Land Tax (SDLT) applies in England and Northern Ireland. Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax, each with its own rates and rules. GOV.UK sets out the current SDLT rules and rates, and HMRC provides a calculator.
Rates and thresholds change from time to time, so always check the current position and take advice from your solicitor or a tax adviser. This guide is general information, not tax advice.
Higher rates for additional dwellings
If you already own a residential property and buy another without replacing your main residence, the higher rates for additional dwellings usually apply. Most investors buying with a bridge pay these rates. Companies buying residential property also usually pay the higher rates, and very high-value purchases by companies can face a higher flat rate. See residential SDLT rates on GOV.UK.
Non-UK residents generally pay a further surcharge on residential purchases; see our overseas borrower guide.
Chain breaks and replacing a main residence
If you use a chain break bridge to buy a new home before selling your old one, you will usually own two homes on the completion date and pay the higher rates. If you sell your previous main residence within the period allowed by HMRC, currently three years, you can normally claim a refund of the extra tax. Check the conditions on GOV.UK and with your solicitor, and budget for paying the higher rates upfront.
Mixed-use and commercial property
Non-residential and mixed-use purchases, such as a shop with a flat above, are charged at non-residential rates, which can be lower than the higher residential rates. Whether a property is genuinely mixed-use depends on the facts, and HMRC scrutinises claims closely, so take professional advice. Multiple Dwellings Relief, once used on purchases of several dwellings, was abolished in 2024.
Funding the tax
Bridging lenders lend against the property, and the loan to value is measured on the price or value, so stamp duty is normally paid from your own funds. Where you offer additional security, the extra borrowing can sometimes cover purchase costs.
Include SDLT in your cash budget alongside the deposit and fees; see how much deposit you need. Then compare lenders on Instant Quotes.
Other taxes and costs to check
Stamp duty is not the only tax that affects a property purchase. On commercial property, VAT may be charged on the price where the seller has opted to tax, and SDLT is calculated on the VAT-inclusive price. Whether VAT can be recovered depends on your own VAT position, so take advice before exchanging.
On the sale or refinance that repays the bridge, capital gains tax or corporation tax may arise on any profit, depending on how the property is held. Developers selling new homes may be treated as trading rather than investing, which changes the tax treatment.
None of these change how a bridging lender sizes the loan, but they all affect your cash flow and the profit in the deal. Building them into your appraisal or budget at the outset, with advice from a tax professional, avoids unwelcome surprises.
Common questions
Does a bridging loan affect stamp duty?
No. Stamp duty depends on the property, price and buyer, not on how the purchase is financed.
When is stamp duty paid on a bridged purchase?
SDLT is normally due within 14 days of completion, usually paid through your solicitor.
Can I reclaim the higher rates after a chain break?
Usually, if you sell your previous main residence within the period HMRC allows, currently three years, subject to the conditions on GOV.UK.
This guide is for general information only and should not be treated as legal, tax or financial advice. Lender requirements depend on the property and your circumstances.
