Stamp duty on second homes

If you own a home, you may have had to pay stamp duty. But did you know that stamp duty rules are different if you buy a second home? Whether you’re buying a holiday home or a place for a relative, you might need to factor stamp duty into your costs.

 

What is stamp duty?

Stamp duty, or Stamp Duty Land Tax (SDLT), is a tax you pay when you buy a property worth over a certain value.

When you’re buying your first home, you might not have to pay any stamp duty if you qualify for first time buyer relief. But, if you decide to move or buy a second home, you might need to pay SDLT.

What is the stamp duty rate on a second home?

How much stamp duty you pay on a second home can differ based on where the property is located in the UK. This is because different parts have different rules – such as Land Transaction Tax in Wales (LTT), and Land and Building Transaction Tax (LBTT) in Scotland.

Your stamp duty rate will also change based on the price of your second property. Compare the higher rates for second homes in each part of the UK.

If you’re not a UK resident, you might also need to pay an extra 2% in England and Northern Ireland.

  • Second home LTT example in Wales

    Say you already own a home, but you’ve decided to purchase a buy to let property in Wales. This will be the second residential property that you own.

    The buy to let property costs £275,000, so you’ll need to pay LTT when you complete.

    In this example, you’d end up paying:

    • 5% (£9,000) on the first £180,000
    • 8.5% (£5,950) on the next £70,000
    • 10% (£2,500) on the next £25,000

    You would pay £17,450 in LTT.

    Land Transaction Tax on a second property in Wales

    Purchase price

    Land transaction tax rate

    Purchase price

    Up to £180,000

    Land transaction tax rate

    5%

    Purchase price

    £180,001 and £250,000

    Land transaction tax rate

    8.5%

    Purchase price

    £250,001 and £400,000

    Land transaction tax rate

    10%

    Purchase price

    £400,001 and £750,000

    Land transaction tax rate

    12.5%

    Purchase price

    £750,001 and £1.5 million

    Land transaction tax rate

    15%

    Purchase price

    Over £1.5 million

    Land transaction tax rate

    17%

    For properties in Wales, you can use a Land Transaction Tax (LTT) calculator to help with your own calculations.

  • Second home LBTT example in Scotland

    Say you already own a home, but you’ve decided to purchase a buy to let property in Scotland. This will be the second residential property that you own.

    The buy to let property costs £275,000, so you’ll need to pay LBTT when you complete. In Scotland you also have to pay Additional Dwelling Supplement (ADS) at 8% of the property's total purchase price (source moneyhelper.org.uk).

    In this example, you’d end up paying:

    • 0% (£0) on the first £145,000
    • 2% (£2,100) on the next £105,000
    • 5% (£1,250) on the next £25,000.

    You will then pay 8% (£22,000) for Additional Dwelling Supplement (ADS) based on the whole purchase price of the property (£275,000).

    So the total LBTT you would pay including the ADS would be £25,350.

    Land and Building Transaction tax on a second property in Scotland

    Purchase price

    LBTT including ADS (8%)

    Purchase price

    Up to £145,000

    LBTT including ADS (8%)

    8%

    Purchase price

    £145,001 and £250,000

    LBTT including ADS (8%)

    10%

    Purchase price

    £250,001 and £325,000

    LBTT including ADS (8%)

    13%

    Purchase price

    £325,001 and £750,000

    LBTT including ADS (8%)

    18%

    Purchase price

    Over £750,000

    LBTT including ADS (8%)

    20%

    For Scotland, use a Land and Buildings Transaction Tax calculator to help with your own calculations.

    If the purchase price of the property is less than £40,000, you do not pay any Land and Buildings Transaction Tax (LBTT).

Second home SDLT example in England and Northern Ireland

Say you already own a home, but you’ve decided to purchase a buy to let property in England. This will be the second residential property that you own.

The buy to let property costs £275,000, so you’ll need to pay stamp duty when you complete.

In this example, you’d end up paying:

  • 5% (£6,250) on the first £125,000
  • 7% (£8,750) on the next £125,000
  • 10% (£2,500) on the next £25,000

You would pay £17,500 in total.

Stamp duty on a second property in England and Northern Ireland

Purchase price

Stamp duty rate

Purchase price

Up to £125,000

Stamp duty rate

5%

Purchase price

£125,001 to £250,000

Stamp duty rate

7%

Purchase price

£250,001 to £925,000

Stamp duty rate

10%

Purchase price

£925,001 to £1,500,000

Stamp duty rate

15%

Purchase price

Over £1.5 million

Stamp duty rate

17%

For properties in England or Northern Ireland, you can use the HMRC Stamp Duty Land Tax calculator to help with your own calculations.

If the purchase price of the property is less than £40,000, you do not pay any stamp duty.

Let’s look at the details

  • Yes, you’ll have to pay stamp duty on a second home if it costs £40,000 or more. Stamp duty on a second home is also charged at a higher rate.

    In England, Wales and Northern Ireland, you are charged an extra 5% on top of the standard stamp duty rates. In Scotland, you are charged an extra 8%. This is known as the stamp duty surcharge.

    But there are some exceptions. For example, you don’t need to pay the extra charge if you’re buying a property to replace your main residence or you sold your last main home within 3 years of completing the new purchase.

    If your main property hasn’t sold by the day the new purchase is complete, you’ll need to pay higher rates as you now own 2 properties.

  • There are a few cases where you might not need to pay stamp duty on a second home, including when:

    • you inherit the property in a will. But you might be charged inheritance tax
    • the property is gifted. But if there is still a mortgage, you might still need to pay stamp duty
    • you divorce or end a civil partnership. You might still need to pay if you are unmarried or not in a civil partnership
    • buying a moveable home. For example, houseboats, mobile homes and caravans
    • buying a freehold property for less than £40,000
    • buying a property with a 7 year or over lease for less than £40,000 with rent under £1,000 a year.

  • If you buy a new home to live in and delay selling your old property, you might have to pay higher stamp duty rates. This happens because you'll be considered to own 2 homes.

    But, if your last home sells within 3 years of completing on your new home, you can apply for a refund on the stamp duty. You have up to 12 months from the sale date to claim your refund. You also have up to 12 months from the filing date of your stamp duty return. You can choose the later date.

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