The higher rates of stamp duty for additional dwellings purchased by individuals and for first and subsequent dwellings purchased by non-natural persons have applied since 1 April 2016 and are levied on any acquisition that is referred to in the legislation as a ‘higher rates transaction’, which is broadly as follows:
- the purchase of additional dwellings in England, Wales and Northern Ireland by individuals were, at the end of the day of purchase, sole or joint individual purchasers own two or more dwellings and are not replacing their main residence. The charge does not however apply where at the end of the day of purchase a sole individual purchaser owns an interest in only one dwelling, or joint individual purchasers together own an interest in only one dwelling; and
- the first and subsequent purchases of dwellings by persons who are not individuals except where the 15% (or 17% for non-UK residents) rate under Sch 4A already applies
Do You Pay Stamp Duty on Second Homes?
Second and additional residential properties in England and Northern Ireland normally carry a 3% surcharge on top of the standard rate of Stamp Duty.
What is the definition of a main residence or primary residence for SDLT?
There is no statutory definition of a main residence for SDLT and it is a matter of fact and circumstance. HMRC states at SDLTM09812 that “Where an individual resides at more than one dwelling, all the facts and circumstances of the particular case must be considered in order to conclude which residence is the main residence. The rules do not allow an individual to nominate which dwelling is their main residence.”
How Much is Stamp Duty on Second Homes?
The charge is 3% above the normal SDLT residential rates and is charged on the slices of the price of the property that falls into each band. The current stamp duty on second home rates are set out in an alternative ‘Table A: Residential’ that is substituted for the normal Table A for when there is a higher rates transaction and the following table shows the rates for UK residents in the alternative Table A effective from 1 October 2021:
|Minimum property purchase price||Maximum property purchase price||Basic residential SDLT Rate||Additional SDLT Rate|
You can calculate how much SDLT you owe on a second home, using an online calculator.
Are There Exemptions to Paying Stamp Duty on Second Homes?
There are a number of exemptions to the 3% rate of SDLT on additional homes. The following types of residential purchases are exempt from the higher rates of SDLT:
- An additional home costing less than £40,000
- Another home bought during a divorce or separation
- A mixed-use property (ie part of, or above a commercial property)
- A second or additional home to be used as your main residence (in which case, you have to prove that
- you have sold your previous main residence).
- A property bought from an employee by an employer.
- The property is uninhabitable at the time of purchase
Social landlords and charities are also exempt from the 3% higher rates on additional residential homes.
Does The Stamp Duty Holiday Apply to Second Homes?
The Covid-19 SDLT Holiday does apply to second homes. The current rates – and when they return to the standard thresholds
What happens if you don’t declare SDLT on a second home?
Not declaring second home SDLT when it is payable is likely to be detected by HMRC using the intelligence-gathering resources available to HMRC and then to an assessment for the additional SDLT payable plus interest and a penalty.
Can I Claim an SDLT Refund on a second home?
Yes – you have 12 months after the disposal of your old main residence or if later 12 months from the filing date of the return for the new main residence, in which to claim a refund.
How Can Patrick Cannon Help?
Patrick Cannon is an expert in Stamp Duty Land Tax and Stamp Duty, having worked for over 35 years in the field, both as a solicitor and barrister, he is widely recognised as an SDLT Specialist
Buying a second or additional home usually carries a 3% surcharge on top of the standard rate of SDLT.
However, there are a number of exceptions and reliefs which could save you money. Patrick Cannon can guide you through the options, ensuring that you or your business are compliant with HMRC regulations.
If you have attempted to reduce the SDLT rates on an additional home, you may be facing an investigation or HMRC litigation for SDLT avoidance. Patrick Cannon offers his longstanding expertise to manage your correspondence with HMRC, defend you in a tax tribunal or bring about a case against a SDLT avoidance scheme provider.
To find out more about stamp duty on second homes, or to arrange a consultation – in person or via video call – contact Patrick Cannon here.
Other SDLT Areas Patrick Can Advise On:
- SDLT Avoidance Schemes
- SDLT Planning
- Reclaiming Stamp Duty
- Multiple Dwellings Relief for SDLT
- SDLT Anti Avoidance Rule
- Stamp Duty Appeals
- Mixed Used Claims
- SDLT on Divorce and Separation
- SDLT for Non-UK Residents
Frequently Asked Questions
Your primary home. If you have other property interests, you must be able to prove that you intend to live in a new home to avoid paying the 3% surcharge on second / additional homes.
No – as you are married, or in a civil partnership, the purchase of an additional property while you still own your primary home or another residential property will be subject to the higher stamp duty rate.
No – inherited property is only subject to inheritance tax, not to SDLT.
Yes, the higher rate of Stamp Duty Land Tax (SDLT) is payable on lease extensions of second or additional homes – provided that the premium is £40,000 or more.
An SDLT refund of the 3% higher rates will be available when a former main residence is sold within 3 years of the purchase of the replacement main residence. Read more about making a refund claim online.
A buy to let property is classed as a second home if the buyer or their spouse or civil partner already owns another dwelling
Yes, companies pay the 3% higher rates for the first and every other dwelling they buy but where multiple dwellings relief applies and there is some non-residential property included in the transaction the 3% rates will not apply to that purchase.