Stamp Duty Land Tax on Second Homes

In the Autumn Statement 2015 it was announced that from 1st April 2016 higher rates of Stamp Duty Land Tax (SDLT) will be charged on purchases of additional residential properties above £40,000, for example, second homes or buy to let properties.

The higher rates will be 3% above the current SDLT rates. Outside the higher rate charge will be purchases of caravans, mobiles homes or houseboats.

The current SDLT rates are set out below, as are the increased rates:

Value of Property Current SDLT rate Higher SDLT rate
Up to £125,000 0% 3%
Next £125,000

(£125,001 – £250,000)

2% 5%
Next £675,000

(£250,001 – £925,000)

5% 8%
Next £575,000 (£925,001 – £1.5m) 10% 13%
£1.5m + 12% 15%

Example: if you buy a house for £275,000 the total SDLT will be £3,750:

0% on £125,000            £0

2% on £125,000            £2,500

5% on £25,000              £1,250

If the same property were bought as a second home for £275,000 the SDLT increases to £12,000:

3% on £125,000            £3,750

5% on £125,000            £6,250

8% on £25,000              £2,000

If you are thinking of buying a second home or a buy to let property you may want to act as soon as possible to avoid the increase in SDLT.