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How Much Stamp Duty Will You Pay on a Second Home?

Martha Lott

Written by

29th Sep 2021 (Last updated on 29th Sep 2021) 4 minute read

If you’re buying a second home in the UK, you’ll be subject to paying an additional 3% Stamp Duty Tax in England and Northern Ireland, 3% Land Transaction Tax in Wales and 3% Land and Buildings Transaction Tax in Scotland. This includes buying holiday homes and buy-to-let properties.

Due to the impact of the Covid-19 pandemic on the property market, there was an extension to the Stamp Duty holiday across the UK which came to an end on September 30th 2021. This means that the Stamp Duty rates are back to what they were prior to the holiday, as of October 1st 2021.

We work with property experts to bring you everything you need to know about buying, selling and moving. In this article, we look at the different rates of Stamp Duty across the UK and feature breakdowns of rates and cost to help when you’re buying a second home.

This article will cover the following:
  1. England and Northern Ireland
  2. Wales
  3. Scotland
  4. What Properties are Excluded?
  5. Do First-time Buyers Have to Pay?
  6. How to Avoid Stamp Duty on Second Homes?
  7. How Do I Get a Stamp Duty Refund?
  8. What if I’ve Inherited a Property?
  9. Do I Have to Pay If My Property is Abroad?
  10. Final Steps of Buying a House

England and Northern Ireland

In England and Northern Ireland, expect to pay an additional 3% Stamp Duty when buying a second home.

As an example, here’s a breakdown of Stamp Duty rates when buying a second home in England and Northern Ireland worth £250,000.

The first £125,000 is charged at 3% = £3,750
The next £125,000 is charged at 5% = £6,250
Total Stamp Duty: £10,000

Below are the rates of Stamp Duty you’ll have to pay on a second home based on property price.

Property PriceStamp Duty Tax Rate

Up to £125,000

3%

£125,001 - £250,000

5%

£250,001 - £925,000

8%

£925,001 - £1.5m

13%

Over £1.5m

15%

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Wales

In Wales, expect to pay an extra 4% Land Transaction Tax on second homes.

As an example, here’s a breakdown of Land Transaction Tax rates when buying a second home in Wales worth £250,000.

The first £180,000 is charged at 4% = £7,200
The next £70,000 is charged at 7.5% = £5,250
Total Land Transaction Tax: £12,450

Below are the rates to expect from October 1st 2021.

Property PriceLand Transaction Tax Rate

Up to £40,000

0%

£40,001 - £180,000

4%

£180,001 - £250,000

7.5%

£250,001 - £400,000

9%

£400,001 - £750,000

11.5%

£750,001 - £1,500,000

14%

£1.5m plus

16%

Scotland

In Scotland, expect to pay an additional 4% Land and Buildings Transaction Tax on second home purchases, also known as Additional Dwelling.

As an example, here’s a breakdown of Land and Buildings Transaction Tax rates when buying a second home in Scotland worth £250,000.

The first £145,000 is charged at 4% = £5,800
The next £105,000 is charged at 6% = £6,300
Total Land Transaction Tax: £12,100

Below are the rates you can expect to be charged from October 1st 2021.

Property PriceLand and Buildings Transaction Tax Rate

Up to £40,000

0%

£40,000 - £145,000

4%

£145,001 - £250,000

6%

£250,001 - £325,000

9%

£325,001 - £750,000

14%

£750,001

16%

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What Properties are Excluded?

The following properties are exempt from paying additional home Stamp Duty:

  • Caravan
  • Mobile home
  • Houseboat
  • A second property you intend to live in after selling your old property within 3 years
  • A property under £40,000

Do First-time Buyers Have to Pay?

If you don’t own any property but want to purchase a buy-to-let property, then you won’t have to pay second home Stamp Duty as you will still only own one property. It’s worth noting, if you’re buying a buy-to-let property, you will be subject to other taxes such as Income Tax and Capital Gains Tax.

How to Avoid Stamp Duty on Second Homes?

Most of the time, you will be legally required to pay additional Stamp Duty when buying a second home, however, there are a few ways to avoid paying the tax.

  1. Consider the type of property

    If you want to buy a second home as a holiday home, then buying a caravan or motorhome will help you to avoid paying additional Stamp Duty as those property types are exempt.

  2. Gifted deposit if buying for family

    If you plan to buy a second property for your children or family to live in, you can avoid paying additional Stamp Duty by putting the mortgage in their name and gift them the deposit.

  3. Buy a home under £40,000

    If you buy a property costing less than £40,000, you can avoid paying Stamp Duty, Land Transaction Tax and Land and Building Transaction Tax.

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How Do I Get a Stamp Duty Refund?

You can apply for a refund if you manage to sell your original property within 36 months (3 years) of completing on your second property. You can claim back the Stamp Duty you paid on your first property.

This is quite common as many people complete on their second property expecting to have sold their original property by now, meaning they don’t intend on owning two properties.

To apply for a refund, you’ll have to submit details to HMRC including information about both of the properties, how much Stamp Duty you paid and how much you want to claim.

What if I’ve Inherited a Property?

Unfortunately, if you’ve inherited a property solely, then you’ll have to pay additional Stamp Duty on it. If you’ve inherited less than a 50% share, which is more common, then you won’t have to pay Stamp Duty.

Do I Have to Pay If My Property is Abroad?

Yes, if you own a property abroad and then want to buy property in the UK, then you are subject to Stamp Duty for your second property, regardless of the tax rules in the other country you own property.

Final Steps of Buying a House

This article is the last of our home buying guide. Our advice centre features a variety of useful guides to help you through the moving process. The next guide in our series is selling a house.

Martha Lott

Written by Martha Lott

Having written for Huffington Post and Film Criticism Journal, Martha now regularly researches and writes advice articles for everything moving house related.