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Second home ownership is a dream for many. Whether it’s a place for you to get away, an asset to pass to your children or a rental investment, the idea has a lot of appeal.
But don’t forget that you are required to pay a tax called stamp duty on every house purchase in the UK. The supply of second homes — especially in the more desirable areas of the UK — has been constrained by complex planning rules, a desire to leave more housing stock for people buying their main residence, and efforts to rein in a booming buy-to-let market. Here’s a guide to the stamp duty surcharge, introduced in 2015.
What is stamp duty?
Stamp duty is a tax payable as a percentage of the purchase price of a property.
You’ll also see it referred to as Stamp Duty Land Tax (SDLT). The current rates are as follows:
PURCHASE PRICE OF PROPERTY | STAMP DUTY RATE | STAMP DUTY RATE FOR ADDITIONAL PROPERTIESUP TO £250,000 | 0% | 3%
£250,001 TO £925,000 | 5% | 8%
£925,001 TO £1.5M | 10% | 13%
OVER £1.5M | 12% | 15%
*The SDLT rates changed as of 23/9/2022 and may also change in the future, according to the government’s tax policy.
As you can see from the table, the rates for second homes are different — 3% higher, unfortunately. It’s graded and tied to the value of the property, so the more expensive the home, the more you pay. It’s also banded, meaning you pay the different grades only on the amount above the threshold.
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