How does stamp duty work for second homes?

If the property you're buying isn't going to be your only home, the stamp duty rules change significantly. There's a surcharge on top of the standard rates, a 36-month grace period if you're replacing your main home, and a refund mechanism if your timing slips. If you're new to the tax itself, start with our guide on how UK stamp duty works; this page focuses on the second-home and buy-to-let rules on top of it.

The 5% surcharge

Buying an additional residential property in England or Northern Ireland (a second home, a holiday cottage, or a buy-to-let) adds 5 percentage points on top of every band of standard Stamp Duty Land Tax. The surcharge applies if you'll own two or more residential properties at the end of the day of completion and you're not replacing your main residence.

On a £400,000 second property, that surcharge alone is £20,000.

Replacing your main home: the 36-month rule

If you're buying a new main home but haven't sold your old one yet, you'll pay the surcharge at completion, but you can claim it back if you sell the previous main home within 36 months. The clock starts on the date of the new completion.

This is the trap: people assume they can avoid the surcharge by completing on the new place "just before" the sale of the old. They can't. HMRC takes the higher rate first, and you reclaim it later. You'll need the cash for the surcharge sitting in your account at completion regardless.

Who counts as an "owner"?

Any residential property anywhere in the world that you (or your spouse / civil partner) own a share of counts. A flat you inherited and rent out in another country still counts. Children under 18 don't have separate ownership for these rules. Their property is treated as the parents'.

Companies and trusts

Companies buying residential property pay the surcharge from the first pound. There's no equivalent of "main residence" relief. Properties over £500,000 bought by companies face an additional 17% flat rate in some cases. If you're considering a limited-company buy-to-let structure, the stamp duty bill is one of several things to model carefully.

Stamp duty is only one of the costs of a buy-to-let. See buy-to-let costs for the full picture, from fees and repairs to how rental profit is taxed.

Common edge cases

Buying with a partner who already owns. If either of you owns another property, the surcharge applies to the whole purchase, not half of it.

Inheriting a share within three years of buying. Inheriting a share of 50% or less in a property doesn't trigger the surcharge, but only for three years from the date of inheritance.

Mixed-use properties. A property that's part-residential, part-commercial (a flat above a shop you own outright) is taxed at non-residential rates, which are different and don't carry the surcharge.

This guide is general information, not tax advice. For complex situations (divorce, trusts, companies, overseas property), speak to a conveyancing solicitor or tax adviser before you commit.