Stamp duty on a second home

If you’re buying a second home that you won’t be living in, you’ll be charged an additional rate of stamp duty. The amount you pay depends on the property value and where you live in the UK. We set out the rules for second homes, look at coronavirus stamp-duty cuts and see how you can legally avoid paying stamp duty. 

If you’re buying a second home that you won’t be living in, you’ll be charged an additional rate of stamp duty. The amount you pay depends on the property value and where you live in the UK. We set out the rules for second homes, look at coronavirus stamp-duty cuts and see how you can legally avoid paying stamp duty. 

Mark Gordon
From the Mortgages team
4
minute read
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Posted 15 DECEMBER 2020

Stamp duty holiday due to coronavirus

The chancellor announced a stamp duty holiday in his summer statement in a bid to kick-start the housing market as part of the government’s response to the COVID-19 pandemic. The tax cut applies to homes bought in England and Northern Ireland from 8 July 2020 to 31 March 2021.

The measure was also extended to second homes and buy-to-let properties, although people buying these additional properties will still have to pay a surcharge on top of the temporary rates.

Who has to pay stamp duty on a second home?

Anyone buying an additional residential property has to pay stamp duty, with a few exceptions. There is a 3% surcharge on top of the basic stamp-duty rate on second homes bought in England and Northern Ireland, while similar rules apply in Scotland and Wales (see below). The surcharge applies to any of the following:

  • A holiday home
  • A buy-to-let property
  • A home you own a share in, if your share is worth £40,000 or more
  • A property you buy in the UK, if your main home is abroad
  • A second home bought via a limited company

How much is stamp duty on a second home?

Second-property stamp-duty rates are the same in England and Northern Ireland, but different if you’re buying a property in Scotland or Wales.

This table shows the new stamp duty rates for second homes in England and Northern Ireland (8 July 2020 to 31 March 2021).

Property value Standard stamp duty rate Additional property stamp duty rate
Up to £500,000 0% 3%
£500,001-£925,000 5% 8%
£925,001-£1.5m 10% 13%
£1.5m+ 12% 15%

These are the new land and buildings transaction tax rates for second properties in Scotland (15 July 2020 to 31 March 2021).

Property value  Standard stamp duty rate  Additional property stamp duty rate 
Up to £250,000  0% 4%
£250,001-£325,000  5% 9%
£325,001-£750,000 10% 14% 
£750,000+ 12%  16% 

These are the new land transaction tax rates for second homes in Wales (27 July 2020 to 31 March 2021).

Property value Standard stamp duty rate Additional property stamp duty rate
Up to £180,000 0% 3%
£180,001-£250,000 0% 6.5%
£250,001-£400,000 5% 8%
£400,001-£750,000 7.5% 10.5%
£750,000-£1.5m 10% 13%
£1.5m+ 12% 15%

Are any homes exempt from stamp duty for second homes?

There are exceptions but, generally speaking, you’ll have to pay the tax on most second properties. You won’t have to pay the additional stamp duty rate on:

  • caravans, mobile homes or houseboats irrespective of how much you pay for them
  • a home you’re going to live in, provided you’ve sold your existing property (more about this below…)

What if the home I’m buying will be my main residence?

If you’re intending to replace your main residence with the property you’re purchasing, you won’t have to pay the additional stamp-duty rate. There is a caveat to that, though – you must have sold your existing home to qualify for this exemption.

If you haven’t sold your previous main residence by the day of completion on your new home, you’ll have to pay the second property tax. That’s because you now own two properties.

But the good news is that you can apply for a second-home stamp-duty refund if you sell your previous main home within 36 months.

How to avoid stamp duty on a second home

There are ways to legally avoid stamp duty on a second home in the UK, although you should always be careful not to break the rules.

  • Stamp duty is not normally payable on properties that are inherited, although inheritance tax may still apply. You will have to pay additional stamp duty if you buy another residential property
  • You’re exempt if the property has been transferred following a divorce or separation after the end of a civil partnership
  • If you’re buying a home for your children, you can gift the deposit. As long as you’re not the joint owner of the property, the second-home stamp-duty surcharge won’t apply
  • Guarantors for a mortgage are not classed as property owners so will avoid the additional rate

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