Stamp Duty higher rates on second homes and additional properties

Buying a second home, a holiday home or a buy-to-let property in England or Northern Ireland costs more in property tax than buying a home to live in. On top of the standard Stamp Duty rates there is a surcharge of 5% on buy-to-let, holiday or second homes¹. The surcharge applies to the whole purchase price, not just part of it, and it applies as long as the property costs more than £40,000². Stamp Duty Land Tax itself applies in England and Northern Ireland only: Scotland and Wales run their own property taxes, with their own surcharges³.

The higher rates exist because the government wants to tax the purchase of homes that are not somebody's main residence more heavily. They have applied to purchases of additional residential properties since 1 April 2016⁴. The rules are set out in legislation and HMRC guidance, and they turn on one central question: at the end of the transaction, does the buyer own two or more properties, and is the new one replacing a main residence that has been, or will be, sold?

There is an important escape valve. If you buy a new main home before managing to sell your old one, you pay the higher rates at completion, but you can claim the surcharge back if you sell the previous main home within three years⁵. This page explains when the higher rates apply, how the bill is worked out, how the refund works, and what happens when you eventually sell.

The higher rates: 5 percentage points on top of standard Stamp Duty

The surcharge on additional properties is not a separate tax. It is the ordinary residential Stamp Duty rates with five percentage points added to each band. The legislation sets this out in a table of higher rates for "additional dwellings": 5% on the first £125,000 of the price, 7% on the slice from £125,000 to £250,000, 10% up to £925,000, 15% up to £1.5 million, and 17% on anything above that⁹. A Scottish Government policy review describes the equivalent England and Northern Ireland rates as "currently five percentage points" above the standard residential rates¹⁰.

The practical effect is that a second-home buyer loses the nil-rate band entirely. A main-residence buyer pays nothing on the first £125,000 of a property's price¹¹, but an additional-property buyer pays 5% on that slice from the first pound above the £40,000 floor². The rates changed on 1 April 2025, and the official rates and allowances for that year show the contrast clearly: on the £125,001 to £250,000 band, a main-residence buyer pays 4% while an additional-property buyer pays 9%¹².

Two examples show the size of the difference. On a property costing £292,000, a first-time buyer pays zero Stamp Duty, but a buyer of an additional property such as a buy-to-let pays £19,200¹³. Stamp Duty is charged on a "slice" basis, meaning each rate applies only to the portion of the price within its band, so more expensive properties face progressively higher rates³.

Who pays the higher rates on an additional property

The higher rates apply when the buyer already owns an interest in another residential property and is not replacing their main residence. The key tests are ownership and replacement, not intention. A buyer who keeps their old home and buys a new one pays the higher rates on the new purchase; a buyer who has sold their main home, or sells it within three years, does not².

Married couples and civil partners are treated as a single unit for Stamp Duty purposes, so HMRC looks at what the couple owns between them rather than at each spouse separately¹⁴. That means if one partner owns a flat and the couple buy a house together, the couple's combined property holdings determine whether the higher rates apply. There is a specific exception in the legislation for transactions between spouses or civil partners living together where there is only one purchaser and one vendor: those transfers are not higher rates transactions⁹.

Joint buyers who are not married are assessed on their own ownership. If one of them already owns a home and the purchase is not replacing that main residence, the higher rates apply to the whole purchase, not just to that person's share. Conversely, HMRC can treat a buyer as replacing their main residence even though they still own an interest in another property, in which case standard rates apply¹⁴.

Some purchases escape the higher rates altogether, or Stamp Duty altogether:

• Moveable homes: houseboats, mobile homes and caravans are excluded from the second-home surcharge².
• Inherited property: no SDLT return is needed where a property was left to you in a will¹⁵.
• Taking on a mortgage: a return is required where you take over a property and pay money or take on a debt such as a mortgage for it, so buying out a co-owner can be a chargeable transaction¹⁵.
• Replacing a main residence: you do not pay the extra charge if you are buying a property to replace your main residence, or you sold your last main home within 3 years of completing the new purchase².

The rules around who counts as owning a property, and when a purchase counts as replacing a main residence, are covered in more detail in when the higher rates do not apply, and the general rules of Stamp Duty Land Tax are explained separately.

How the surcharge is worked out on each slice of the price

Stamp Duty is charged on a slice basis: the price is divided into bands and each band pays its own rate³. With the higher rates, each band's rate is the standard rate plus 5%. The table below shows the bands for an additional property in England and Northern Ireland alongside the standard rates.

The legislation's own table of higher rates sets the bands at 5%, 7%, 10%, 15% and 17%⁹, and the figures buyers see in practice reflect the rates in force from 1 April 2025¹². Because the surcharge removes the nil-rate band, even a modest additional property attracts tax: a buy-to-let at £292,000, a price at which a first-time buyer pays nothing, produces a Stamp Duty bill of £19,200¹³.

Note the £40,000 floor. If the purchase price of the additional property is less than £40,000, no Stamp Duty is payable at all². Above that, the 5% rate applies from the first pound, so a £60,000 second home costs £3,000 in Stamp Duty while a £60,000 main home costs nothing.

Buying a new home before selling your old one

The chain problem is where the higher rates bite most often. A buyer who has found a new home but has not yet completed the sale of their old one owns two properties on the day the purchase completes, so the higher rates apply at that point. The relief is that you do not need to pay the extra charge if you are buying to replace your main residence or you sold your last main home within three years of completing the new purchase². HMRC can view a buyer as replacing their main residence even though they own an interest in another property, in which case standard rates apply¹⁴.

In practice, most buyers in this position pay the higher rates at completion and reclaim the surcharge once the old home sells. That means finding the extra cash upfront, which is one reason the costs of buying a house should be worked out before committing to a purchase. Buyers in Scotland have a specific relief available where a property trader buys the old home: it applies where the seller had arranged to sell the old home and buy another one, the sale fell through, and the property trader's purchase lets the new purchase proceed, provided the seller lived in the old home as their main residence at some point in the previous two years and intends to live in the new home as their main residence¹⁶.

Getting the surcharge back: sell your previous main home within three years

If you sell or give away your previous main home in the three years after you buy your new home, you can apply for a refund of the higher-rate part of your Stamp Duty bill⁵. The refund covers only the surcharge element, the extra 5 percentage points, not the standard-rate tax, which was always due.

The conditions are set out in HMRC's refund guidance: you must have paid the higher rates on the purchase of a new main home, and you must have sold your previous main home within three years of buying the new property, unless exceptional circumstances apply⁷. The same three-year window exists in Wales for the higher rates of Land Transaction Tax¹⁷, and Scotland's Additional Dwelling Supplement has its own repayment rules, discussed below.

To apply, you need your personal details, the main buyer's details if different, details of the property that attracted the higher rates including the purchase date and the SDLT unique transaction reference number, details of the former main home sold including the sale date, address and buyer's name, the amount of tax originally paid, the amount being claimed back, and the bank account and sort code for the refund⁷. HMRC has up to 9 months to make a compliance check on an amended return or claim⁵.

How long you have to claim the refund

Selling within three years is only half the test. There is also a deadline for submitting the claim itself. For properties sold on or after 29 October 2018, HMRC must receive the refund request by the later of 12 months after the date of the sale of the previous main home, or 12 months after the filing date of the Stamp Duty return for the new main home⁷. The legislation puts the same limit in statutory form: the claim must be made within 12 months beginning with the effective date of the transaction that disposes of the previous dwelling⁹.

For sales on or before 28 October 2018, the deadline was the later of 12 months after the sale or 3 months after the date of sale⁷. Where the sale took longer than three years, a claim is still possible if the new home was bought on or after 1 January 2017, exceptional circumstances stopped the sale of the previous home, and the previous home has now been sold⁷.

Scotland's rules have changed over time. Revenue Scotland's current guidance on the Additional Dwelling Supplement sets out that repayment can be claimed if you sell your previous property within 36 months of buying your new one, the property sold was your only or main residence at some time in the 36 months before you bought the property you paid ADS on, and you have lived in the property you paid ADS on as your only or main residence¹⁹. Earlier rules were tighter: in 2023/24 the payment could be reclaimed if the previous main residence was sold within 18 months, and the claim was made within 5 years of the submission date²⁰. The details are covered in reclaiming the Additional Dwelling Supplement.

Scotland and Wales have their own taxes

Stamp Duty Land Tax does not apply across the whole UK: it applies in England and Northern Ireland only³. Scotland collects Land and Buildings Transaction Tax through Revenue Scotland, and Wales collects Land Transaction Tax, which replaced SDLT on residential and non-residential property and land interests from 1 April 2018²¹. The three taxes are tracked separately in official statistics: SDLT revenues for England and Northern Ireland come from HMRC, LBTT revenues from Revenue Scotland, and LTT revenues from the Welsh Government²².

The surcharges differ too, although the rules around replacing a main residence still apply in each nation¹⁴. In Scotland, the Additional Dwelling Supplement is charged at an extra 8%², and its repayment conditions are set by Revenue Scotland as described above¹⁹. In Wales, the higher rates of Land Transaction Tax have their own rules, covered in when the higher rates of Land Transaction Tax apply, and the taxpayer has up to three years to sell their previous main residence and claim a refund¹⁷.

The deadlines also differ. An LBTT return must be made to Revenue Scotland within 30 days of the effective date of the transaction²³, and the same 30-day filing date applies to a standard house purchase in Scotland, beginning with the day after the effective date¹⁶. The Scottish Parliament and Senedd Cymru set their own property rates under legislation that makes provision for Scottish and Welsh rates to be set by those parliaments²⁴, so the surcharge levels in each nation can change independently of England and Northern Ireland.

Other surcharges that can stack: buyers from outside the UK

A second surcharge exists for overseas buyers. A 2% surcharge for Non-Resident Stamp Duty Land Tax was introduced on the purchase of properties by non-residents from 1 April 2021²⁵. Overseas-based buyers of residential property in England and Northern Ireland must pay this surcharge of 2% on top of the normal rates¹.

The two surcharges can stack. An overseas resident buying an investment property in England or Northern Ireland pays Stamp Duty at 7% more than the standard rates for home movers: the 5% additional-property surcharge plus the 2% non-resident surcharge¹. The legislation reaches dwellings outside England and Northern Ireland for the purposes of the higher rates, with special provisions for dwellings in Wales and elsewhere⁹.

There is a refund route for the non-resident surcharge as well: if you meet certain residence requirements after your transaction, you may be able to apply for a refund of the 2% surcharge for non-UK residents⁵. The rules on who counts as non-resident are covered in the non-UK resident surcharge.

Filing the return and paying within 14 days

The Stamp Duty return and the tax are both due within 14 days of the effective date of the transaction, which is usually the completion date¹⁸. In practice the return and payment are usually handled by your solicitor as part of the purchase¹¹, but the legal responsibility for the tax sits with the buyer.

HMRC charges a late filing penalty and interest if the return is not filed on time¹⁸, and the duty itself must be paid within 14 days of the effective transaction date²⁶. In Scotland, you may be charged penalties and interest if you do not submit or pay your LBTT return on time²⁷. In Northern Ireland, if you delay contacting Land and Property Services about rates on a newly bought home, you will receive a backdated rates bill²⁸.

The deadline rules, penalties and what to do if things go wrong are covered in the deadline to pay Stamp Duty and what happens if you don't pay on time.

Selling a second home later: Capital Gains Tax at 18% or 24%

The surcharge is a tax on buying. When a second home is eventually sold, a different tax applies to the profit. Capital Gains Tax on residential property is charged at 18% for basic rate taxpayers and 24% for higher rate taxpayers for disposals since 6 April 2024; before that date the rates were 18% and 28%⁸.

You do not get a bill for Capital Gains Tax: you must work out your own liability and report it³⁰. How you report and pay depends on whether you sold a residential property in the UK³¹. You may get tax relief if you sold a property that was your main home³⁰, which is why a genuine second home or buy-to-let usually faces the full charge while a main residence often does not.

To report a gain you need details of how much you bought and sold the asset for, the dates you took ownership and disposed of it, other relevant details such as the costs of buying, selling or making improvements and any tax reliefs, and calculations for each capital gain or loss you report³¹. Non-UK residents must report all sales of UK property or land, residential and non-residential, even if there is no tax to pay³⁰. Where the property was inherited, Capital Gains Tax applies when you sell anything you inherited³².

Where to get help

The rules on the higher rates are HMRC's to administer in England and Northern Ireland, and HMRC's guidance covers both the general refund process and the specific higher-rates refund claim⁵. Revenue Scotland handles the Additional Dwelling Supplement and LBTT returns¹⁹, and the Welsh Revenue Authority's higher-rates refund window is reflected in the official statistics on Land Transaction Tax¹⁷. Your solicitor or conveyancer is the first port of call for the return itself, since they usually file it and pay the tax on completion¹¹.

If you believe the higher rates were charged in error, or a refund claim was refused, the starting point is HMRC's refund guidance and, where a conveyancer failed to file or pay correctly, what to do if your conveyancer fails to pay property tax. Related guides on this site cover Stamp Duty reliefs and exemptions, the Additional Dwelling Supplement in Scotland, Land Transaction Tax in Wales and buying a home in Northern Ireland.