This guide has been produced for information purposes only. As a mortgage broker, we're not able to offer tax advice.
There are so many different Stamp Duty rates that it can be hard to identify how much you’re liable to pay. In this guide, we’ll explain everything you need to know about paying Stamp Duty on a second property.
You pay Stamp Duty Land Tax when you purchase a property or land over a certain value in England and Northern Ireland. If you buy a property which will function as your only main residence, you'll pay Stamp Duty at the standard rates. If you buy a second home or a buy-to-let property, you'll pay Stamp Duty at the standard rates plus a 3% surcharge on each band. The Stamp Duty Tax rates for second homes and buy-to-let properties are the same because they both qualify as second residences.
Until 30/09/21, you won't pay any standard Stamp Duty on the first £250,000 of a first or second residential property or on a buy-to-let property, however you'll still pay the surcharge on a second residential property or a buy-to-let.
You’re liable to pay the surcharge even if the property you currently own is a holiday home abroad and you’re now buying your first property in the UK. It doesn’t matter whether you own a freehold or leasehold, a shared ownership property, or are a joint owner of your previous home – you’ll have to pay Additional Stamp Duty on your new one. What’s more, it’s irrelevant whether you actually bought your previous property, inherited it or were added to the title deeds later on - you technically own a property, therefore any new property you purchase will be a second one.
Stamp Duty Second Home Rates
If you’re buying a second residence or a buy-to-let in England or Northern Ireland:
You’ll pay a 3% Stamp Duty surcharge on top of the standard Stamp Duty rate.
|Property Value||Standard SDLT Rate 01/07/21 - 30/09/21||SDLT Rate on Second Homes or Buy-to-Lets 01/07/20 - 30/09/21|
|Up to £250,000||0%||3%|
|£250,001 - £925,000||5%||8%|
|£925,001 - £1,500,000||10%||13%|
You’re purchasing a second home for £700,000. The maximum rate of Stamp Duty you’ll pay is 8% but this is only for the amount of your property value over £250,000 - i.e. £450,000. You pay Additional Stamp Duty at 3% on the first £250,000 and some at 8% on the remaining £450,000.
- 3% on the first £250,000 of the £700,000 = £7,500
- 8% on the final £450,000 of the £700,000 (the amount from £250,001 - £925,000) = £36,000
- Total SDLT = £43,500
You can calculate how much second property Stamp Duty you’ll pay by following the example. Or, we can work it out for you with our Stamp Duty calculator.
Second Home Stamp Duty Exemption
You’re only exempt from the Stamp Duty on a second home if:
- You purchase a property valued under £40,000, or the share of the property you buy is valued under £40,000
- You buy a caravan, mobile home or house boat
Even if you’re not exempt from paying Stamp Duty on a second property, you can sometimes claim back the Stamp Duty surcharge.
If you purchased a new main residence without selling your previous one, you would have effectively purchased a second home. Therefore, you would have likely paid second home Stamp Duty - i.e. Stamp Duty at the basic rate plus the 3% surcharge.
If you then sold your old property within 3 years of purchasing your new one, you may be entitled to a refund on the surcharge.
This is useful for people who sometimes struggle to sell their previous residence or those who need to relocate quickly.
For more information on Stamp Duty exemptions, see our guide: What is Stamp Duty and Is It Refundable?
What About First-Time Buyers?
A first-time buyer can’t technically purchase a second home. It’s also incredibly hard to find a lender willing to give a first-time buyer a buy-to-let mortgage. Nonetheless, if you’re a first-time buyer who does manage to purchase a buy-to-let property, you’ll pay Stamp Duty at the basic rate; you won’t pay any of the surcharge rates.
Other Types of Second Property Tax
Stamp Duty is the only second home tax you’ll pay at the time of purchase. However, you’ll have to pay Council Tax for the period you own the property.
Any other taxes you pay on a second property will depend on what you use the property for and if you sell that property.
If you rent out a second property as a buy-to-let, you may have to pay Income Tax on your rental income. Learn more about this in our guide: Rental Income and Other Landlord Taxes.
If you sell your second property, you may have to pay Capital Gains Tax. You can find out more in our guide: Capital Gains Tax on UK Property.