Understanding stamp duty on second homes

The rates are higher for second home purchases
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Buying a second home or buy-to-let property for £40,000 or more means that you must pay an additional 3% in Stamp Duty Land Tax (SDLT). This is as well as the current rate for your property band.

There are several tax bands which determine the amount payable on your property:

Min property purchase price  Max property purchase price  Stamp duty rate 
£0 £125,000 0%
£125,001 £250,000 2%
£250,001 £925,000 5%
£925,001 £1.5 million 10%
Over £1.5 million - 12%

Note: If you are moving house and there is a delay in selling your previous residence, then you’ll have to pay the 3% SDLT on second homes and request a refund later down the line.

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Paying Stamp Duty

As usual, you need to pay within 30 days of completing the purchase of your second home. Your solicitor will usually manage this for you but keep an eye on them, as the government is considering reducing the time allowance from 30 days to 14 days in 2017-2018 and you don’t want to be caught out!

Stamp Duty exemptions

Main residences bought for under £125,000 do not have to pay Stamp Duty but as many homebuyers can attest, UK house prices can easily outstrip this amount, which means second homes are often expensive. Only second homes that cost under £40,000 are not liable to pay Stamp Duty.

Other instances where you can avoid paying include the transfer of a proportion of your home’s value to your partner after divorce or separation, or, if you gift the house to someone in your Will, they won’t need to pay.

What’s more, if you purchase a second home as a holiday home and let it for part of the year, you can avoid increased stamp duty charges. This is because HMRC regards holiday homes as a business rather than a second residence.