When buying a second home, understanding the Stamp Duty Land Tax (SDLT) requirements is essential. The tax rate for second properties is higher than for primary residences, with additional rules and exceptions. Here's what you need to know about stamp duty on second homes in the UK.
Stamp Duty on second homes in England
From 31 October 2024, the additional dwelling surcharge increased from 3% to 5%. Combined with the standard SDLT bands, which reverted to their pre-relief thresholds on 1 April 2025, the rates for buying a second property or additional dwelling in England are:
| Price paid | SDLT rate |
|---|---|
| Up to £40,000 | 0% |
| £40,001 to £125,000 | 5% |
| £125,001 to £250,000 | 7% |
| £250,001 to £925,000 | 10% |
| £925,001 to £1.5m | 15% |
| Over £1.5m | 17% |
These rates apply to each portion of the property price that falls within each band, not the full purchase price. So if you buy a second home for £300,000, you pay 5% on the portion between £40,001 and £125,000, 7% on the portion between £125,001 and £250,000, and 10% on the remaining £50,000 above that.
You can use HMRC's Stamp Duty Land Tax Calculator to get an accurate figure for your purchase.
Stamp Duty on second homes in Wales
Wales has its own property tax called Land Transaction Tax (LTT), administered by the Welsh Revenue Authority. The higher residential rates for additional dwellings in Wales are:
| Price paid | LTT rate |
|---|---|
| Up to £40,000 | 0% |
| £40,001 to £180,000 | 4% |
| £180,001 to £250,000 | 7.5% |
| £250,001 to £400,000 | 9% |
| £400,001 to £750,000 | 11.5% |
| £750,001 to £1.5m | 14% |
| Over £1.5m | 16% |
You can use the Welsh Government's Land Transaction Tax calculator to confirm the amount you are likely to pay when you are looking at buying a second home.
Stamp Duty exemptions and how to avoid it on a second home
There are circumstances where the additional dwelling surcharge does not apply:
- The property costs less than £40,000
- The property is a houseboat, caravan or other mobile dwelling, regardless of the price
- The property is being bought as a result of a divorce or separation, though the specific circumstances will need to be checked before assuming no stamp duty is due
- The title deeds are put in the name of someone who has no other property in their name, such as a family member, even if you funded the purchase
If you are selling your existing main residence at the same time as buying a new one, you will not pay the higher rates provided the sale completes on the same day as or before the purchase. If the sale completes after the purchase, the surcharge will apply upfront, but you may be able to claim it back.
How to claim Stamp Duty back on a second home
If you paid the additional dwelling surcharge because your main residence had not yet sold at the point of completion, you may be able to claim a refund from HMRC. To do this, you must sell your main residence within 36 months of buying the new property and submit a refund request to HMRC within 12 months of that sale completing, or within 12 months of the filing date of your SDLT return, whichever comes later.
Given the potential for confusion over timing and eligibility, it is worth speaking to your conveyancing solicitor before assuming a refund applies in your situation.
Common reasons for buying a second home
You might be wondering why anyone would want to buy a second home (or perhaps more than one more), and these are the most often cited reasons:
- Investment opportunity - it should be noted that, generally, house prices are continuing to rise. In fact, the house price index is one of the economic indicators of strength, so you can be quite certain that buying the “bricks and mortar” investment will pay dividends in the long run because of the likelihood of increasing equity.
- Tax benefits - even though this is limited, if you are eligible and the circumstances permit it, you may benefit from tax advantages, although you'll need to do your homework to understand what those are, whether you are eligible and how much you are entitled to.
- Adding to or developing your rental portfolio - buying another home without selling your main property is obviously the point if you are setting yourself up as a landlord, or if you want to expand an existing rental portfolio.
- Holiday let - you might want to buy a second home in a chosen location to get away from it all as a cheap ongoing holiday - perhaps it's a favourite location from past holidays. In the times that you aren't planning on staying there yourself, you might want to make the property work for you by hiring out the home as a holiday let (although its management costs will need to be factored in).
- Providing a home for a family member - quite often, the decision to buy a second home is driven by the desire to help a family member with their living arrangements - perhaps it's one of your children, who isn't in a position to afford the deposit or cannot get a mortgage for the size of property, or it might be an aged parent so that they can move nearer to you.
- A pied-à-terre for work - if you work at a considerable distance from where your main home is and commuting is either too long, stressful or expensive, you might decide to buy a second home to allow you an easily-accessible place to live during the working week.
Importance of a conveyancing solicitor
If you are planning to buy a second home - or adding another property to your rental or investment property - you'll need an experienced conveyancing solicitor, who will work towards as early a completion as possible, while ensuring your interests are met throughout.
The experts at Homeward Legal are well-versed in all aspects of the conveyancing process, providing a quality service at a fee that is great value for money!
Call to get your conveyancing quote started, or to discuss your concerns with your plans to purchase or sell your next home.