Many buyers ask the same question: what tax do you pay when buying a second property? In England and Northern Ireland, the short answer is Stamp Duty Land Tax (SDLT) plus a 5% additional-property surcharge charged on the whole purchase price. Scotland and Wales run their own versions — Land and Buildings Transaction Tax (LBTT) and Land Transaction Tax (LTT) — each with a second-home surcharge of its own.
Stamp duty is the main upfront cost, but it may not be the only tax involved. Letting the property out brings income tax into play, and selling it later can trigger capital gains tax. This guide breaks down who pays, how much, and the exemptions that can bring the bill down.
The stamp duty surcharge on second homes, explained
If you buy an additional residential property — a second home, a holiday home or a buy-to-let — you pay the standard rates of stamp duty plus a surcharge on top. Since 31 October 2024, that surcharge has been 5%, up from the previous 3%. The change was announced in the Autumn Budget on 30 October 2024 and took effect the following day.
Two features of the surcharge catch buyers out:
- It applies to the entire purchase price, not just the portion above a threshold. While standard stamp duty is tiered, the 5% loading effectively works like a flat charge across the whole price.
- It applies even if you intend to live in the new property, as long as you still own another residential home at the end of the day you complete.
A separate change landed on 1 April 2025, when the temporary stamp duty thresholds ended and the nil-rate band dropped from £250,000 back to £125,000. For most buyers, that means a higher bill than during the 2022–2025 period.
Current SDLT rates: standard vs additional property
The table below shows the 2026 rates for England and Northern Ireland. The additional property column is simply the standard rate plus the 5% surcharge on each band.
| Portion of purchase price | Standard rate | Additional property rate |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1.5 million | 10% | 15% |
| Above £1.5 million | 12% | 17% |
You can check the exact figure for your purchase using HMRC’s official stamp duty guidance, which includes a free calculator.
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What actually counts as a “second property”?
The rules look at how many residential properties you own worldwide, not just in the UK. You will usually pay the surcharge if, at the end of the day you complete, you own two or more homes and you are not replacing your main residence.
A few specifics worth knowing:
- The surcharge only applies where the price is £40,000 or more. Caravans, mobile homes and houseboats are excluded.
- Property you own abroad counts. If you own a home overseas and buy an investment flat in London, the surcharge generally applies.
- Married couples and civil partners who live together are treated as a single unit. If either of you owns another property, a purchase by either of you can attract the surcharge.
- Inherited property is disregarded if you own a 50% share or less, or if you inherited a larger share more than 36 months before your new purchase.
These rules can become genuinely complex, particularly around inheritance, divorce and trusts. Where your situation is anything other than straightforward, it is worth confirming the position with a solicitor or tax adviser before you commit.
A worked example using London prices
London is where the surcharge bites hardest, simply because prices are high. The average London property was worth around £542,000 in early 2026 — down about 2.1% on the year — according to the UK House Price Index, published by HM Land Registry and the Office for National Statistics.
Here is how the stamp duty compares on a £542,000 purchase:
- As a main home, the standard SDLT would be roughly £17,100.
- As a second property, you would add the 5% surcharge across the whole price — £27,100 — bringing the total to around £44,200.
That extra £27,100 is the cost of the surcharge alone. It explains why so many investors now factor stamp duty into their offer rather than treating it as an afterthought.
The pressure on the public purse is significant too. HMRC figures show stamp duty receipts reached £13.9 billion in the 2024–25 tax year, with the higher rates on additional dwellings contributing around £5.4 billion of that — a reminder of how central second-home buyers have become to property tax revenue.
When you do not pay the surcharge
The most common exemption is replacing your main residence. If you sell your old home and buy a new one to live in, you should not pay the surcharge — even if you also own a buy-to-let or holiday home at the time.
Timing is the catch. If your purchase completes before your old home sells, you will own two main-residence-type properties on completion day, so you pay the surcharge upfront. You can then reclaim it, provided you sell the old home within the deadline.
The refund process works like this:
- You complete on your new home before selling your previous main residence, and pay the 5% surcharge at completion.
- You sell or give away your previous main residence within 36 months of the new purchase.
- You apply to HMRC for a refund within 12 months of selling the old home, or within 12 months of the SDLT return’s filing date — whichever is later.
- HMRC processes the claim and refunds the surcharge portion of your bill.
Because timing is so important, many buyers budget for the surcharge from the outset and treat any refund as a bonus rather than relying on it.
The rules are different across the UK
Stamp duty is devolved, so the nation you buy in changes both the bands and the surcharge:
- England and Northern Ireland use SDLT, with a 5% additional-property surcharge on top of the standard rates.
- Scotland uses LBTT, with an Additional Dwelling Supplement that rose from 6% to 8% on 5 December 2024.
- Wales uses LTT, with a higher-rate surcharge that increased from 4% to 5% in December 2024. Wales also has no first-time buyer relief.
There is also a 2% surcharge for non-UK residents buying in England and Northern Ireland, which stacks on top of the additional-property surcharge. For companies, most residential purchases attract the higher rates automatically, and a flat 17% rate applies to dwellings over £500,000 — up from 15% since 31 October 2024.
Other taxes to plan for beyond stamp duty
Stamp duty is the upfront tax, but a second property carries tax consequences for as long as you own it and when you eventually sell.
- Income tax applies to rental profit if you let the property. Mortgage interest relief for individual landlords is now given as a basic-rate tax credit rather than a full deduction.
- Capital gains tax may be due when you sell a property that is not your main home, calculated on the gain rather than the sale price.
- Annual charges can apply to higher-value homes held through a company.
None of this is a reason to avoid buying — but it does mean the true cost of a second property runs well beyond the purchase itself. A qualified accountant or tax adviser can model the full picture for your circumstances.
How and when you pay
The mechanics are straightforward but the deadlines are tight:
- You agree the purchase and complete in the usual way.
- Your solicitor or conveyancer files the SDLT return to HMRC within 14 days of completion.
- The stamp duty, including any surcharge, is paid at completion. It cannot be added to your mortgage and must be paid in cash.
Lenders do not advance funds against stamp duty, because it is not part of the property’s value. Buyers usually meet it from savings, a larger deposit, or equity released from another property.
The bottom line
Understanding what tax you pay when buying a second property comes down to one main figure: the standard rate of stamp duty plus a 5% surcharge on the whole price in England and Northern Ireland, with separate regimes in Scotland and Wales. On a typical London purchase, that surcharge can add tens of thousands of pounds, so it belongs in your budget from the very first viewing.
This article is general information, not legal or financial advice. Because reliefs, refunds and exemptions depend heavily on your personal circumstances, speak to a solicitor, conveyancer or tax adviser before you commit to a purchase.
Frequently asked questions
Do I pay the surcharge if I am replacing my main home?
No, provided you sell your previous main residence within 36 months of completing the new purchase. If you have not sold it by completion day, you pay the surcharge upfront and can reclaim it from HMRC later.
Does owning a property abroad affect my UK stamp duty?
Yes — HMRC counts residential property you own anywhere in the world. If your UK purchase is £40,000 or more and you already own a home overseas, the surcharge usually applies.
Is stamp duty the only tax on a second home?
When asking what tax you pay when buying a second property, stamp duty is the main upfront cost, but you may also face capital gains tax when you sell and income tax on any rental income. A tax adviser can confirm exactly what applies to your situation.
How long do I have to pay the stamp duty?
Your solicitor must file the SDLT return and pay within 14 days of completion. The tax is due at completion and cannot be added to your mortgage.
