If you own a property and buy an additional property, you will need to pay an additional rate of stamp duty.
This applies whether it will be a holiday home, buy-to-let, or used for any other purpose.
However, there are certain situations where you may be able to avoid paying this higher rate of stamp duty.
(If you are in any doubt or require more information for your circumstances, contact HMRC on 0300 200 3510.)
How much is the additional stamp duty rate for second homes?
The additional stamp duty rate is different in England and Northern Ireland, Wales, and Scotland. The HMRC has a stamp duty calculator where you can work out whether you will be liable for stamp duty and also give you an idea of how much you will have to pay.
The below can also provide some insight into the different stamp duty rates on second homes, as of October 2021:
Stamp Duty in England and Northern Ireland
| Property Purchase Price | Stamp Duty Rate | Stamp Duty Rate for Second Homes |
| Up to £125,000 | 0% | 3% |
| £125,001 to £250,000 | 2% | 5% |
| £251,000 to £925,000 | 5% | 8% |
| £925,001 to £1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
Stamp Duty in Scotland
| Property Purchase Price | Stamp Duty Rate | Stamp Duty Rate for Second Homes |
| Up to £145,000 | 0% | 4% |
| £145,001 to £250,000 | 2% | 6% |
| £251,000 to £325,000 | 5% | 9% |
| £325,001 to £750,000 | 10% | 14% |
| Over £750,000 | 12% | 16% |
Stamp Duty in Wales
| Property Purchase Price | Stamp Duty Rate | Stamp Duty Rate for Second Homes |
| Up to £180,000 | 0% | 4% |
| £180,001 to £250,000 | 3.5% | 7.5% |
| £251,000 to £400,000 | 5% | 9% |
| £400,001 to £750,000 | 7.5% | 11.5% |
| £750,001 to £1.5 million | 10% | 14% |
| Over £1.5 million | 12% | 16% |
Ways To Avoid Stamp Duty on a Second Home
There are some circumstances in which you won’t have to pay the additional rate of stamp duty on a second home:
- If the property is worth less than £40,000
- If you purchase a houseboat, caravan, or any type of mobile home of any value
- If you intend to live in the second home as your main residence and have sold any properties you already own
What Counts as a Main Residence?
Your main residence is the property that you live at. If you spend time between two properties, HMRC will decide which one counts as your main residence. They will look at various factors including, where you spend the most time, where you are registered to vote, where you are registered with a doctor, and if you have children they will look at where they go to school.
What Happens If I Buy a New Home That Will Be My Main Residence?
If you buy a second home before you sell your current home, you will still have to pay stamp duty, as your current home that you’re living in will be viewed as your main residence. However, if you sell your current home within three years and move into the second home to use as your main residence, you will be able to claim for a refund on the stamp duty you paid.
Can We Avoid the Additional Stamp Duty if the Second Home is Brought in My Spouse’s Name?
You will still have to pay the higher rate of stamp duty on a second home, even if the additional property is bought in your spouse’s name. This is because the HMRC view married couples and civil partners as one unit.
Do I Have to Pay the Additional Rate of Stamp Duty if I’m Getting a Divorce and Buying a New Home?
You do not have to pay the additional rate of stamp duty if you are buying a new home after getting divorced, but only if you have a ‘property adjustment order’ in place. This will transfer the original property to your ex-partner, so you can buy a home and avoid paying the stamp duty rate for a second home.
Your divorce solicitor should be able to help you arrange a property adjustment order if required. If you do not have one in place and you buy a second property, you should be able to claim a refund on the additional stamp duty if the marital home is sold within three years.
Do I Have to Pay the Additional Stamp Duty Rate if I’m Buying a Home for My Children?
You will always have to pay the additional rate of stamp duty if your name is on the deeds for a second property and you already own a home (unless it is a mobile home or worth under £40,000). However, you can still help to buy your children a home without paying the extra stamp duty by:
- Giving the deposit to your child as a gift, so you won’t be a joint owner
- Acting as a guarantor, so you won’t be classified as an owner
- Getting a family offset mortgage, where your savings will be used against the mortgage but you still ‘own’ the money
The Person I’m Buying a Home with Owns Additional Properties but I Don’t – Do We Still Have to Pay the Additional Stamp Duty Rate?
If their name will be on the lease, then you will still have to pay the additional rate of stamp duty. If you’re not married or in a civil partnership, you can avoid paying the additional rate by not having their name on the lease. But this could cause issues with your mortgage application.
Need to sell your home fast to avoid stamp duty? Contact We Buy Any Home today.
