Stamp Duty on a Second Home: Your Guide

Stamp Duty is a tax you pay on property and land. It’s only known as Stamp Duty in England and Northern Ireland.

In Wales, it’s known as the Land Transaction Tax, while it’s the Land and Buildings Transaction Tax in Scotland.

As the Stamp Duty holiday that was brought in during the pandemic comes to an end, it’s a good time to look at what the potential cost of Stamp Duty on a second home would be.

The Stamp Duty holiday

As the pandemic resulted in the property market effectively shutting down, the government introduced a Stamp Duty holiday. This was brought in to give the market a boost and encourage more activity.

In his Summer Statement, chancellor Rishi Sunak announced that Stamp Duty would be cut on properties worth up to £500,000. It was originally set to last until 31 March 2021, but it was extended.

Sunak used his Budget, delivered in March 2021, to explain that “due to the sheer volume of transactions we’re seeing, many new purchases won’t complete in time for the end of March”. As a result, the government extended the holiday. Buyers would continue to pay no Stamp Duty on properties worth up to £500,000 until 30 June 2021.

From then, the holiday would taper off. Buyers would not pay the tax on homes worth up to £250,000 until 30 September. From 1 October 2021, the usual Stamp Duty threshold of £125,000 would apply.

Stamp Duty holiday for second home buyers

The Stamp Duty holiday didn’t eliminate the tax for second home buyers – but it did reduce the amount payable.

For a second home, you’ll usually pay an extra 3% on top of the standard bands. Since you pay an additional amount on top of the usual Stamp Duty costs for a second home, this meant that during the holiday, the cost fell.

Now that the holiday is ending, what can you expect to pay for a second property?

Property Value	Second Home Stamp Duty Rate
Up to £125,000	3%
£125,001 to £250,000	5%
£250,001 to £925,000	8%
£925,001 to £1.5 million	13%
Above £1.5 million	15%

Replacing your main home

When buying a new home, your current home would typically be sold at the same time as buying a new one. But there are occasions when this won’t be possible. You may have to buy a new home while you still own your current one.

This could also be because you bought a rental property, then decided to sell your main home and make the rental property your main residence.

If this happens, you will still have to pay the higher Stamp Duty rate. But you can apply for a refund on that additional amount if you then sell your first home within 36 months. You may also be able to apply after this deadline if you faced exceptional circumstances, such as a public authority taking action to prevent your sale.

You’ll need to explain why the sale couldn’t complete in the usual 36-month timeframe when you apply.

Situations like this can be complicated, so making sure you have the right conveyancing team behind you can be vital.