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Stamp Duty on Second Homes

There are exemptions and circumstance in which this extra SDLT charge can be mitigated.

Stamp Duty Land Tax on second and any additional homes carries higher rates than stamp duty on your main home. The percentage rates are worked out according to the purchase price of the second property unless the purchase is by a company connected to the seller when the charge will be based on the market value of the property when that is more than the price paid.

There are exemptions and circumstance in which this extra SDLT charge can be mitigated.

In many cases, your conveyancer can advise you on whether your second home is liable for the charge, but if you are in any doubt, it is best to consult with an expert tax lawyer.

The barristers at Cannon Chambers have decades of experience in this complex and ever-changing area of tax law. Whether you are looking for advice on stamp duty on a second home prior to purchase; facing an HMRC investigation; or trying to reclaim SDLT on a second home, our barristers offer trusted tax advice and representation.

Our barristers work from anywhere, attending tribunal and court hearings by video or in person. We specialise in a number of tax-related areas of expertise, including stamp duty, financial crime, tax investigations and tax avoidance schemes.

For more information or to book an appointment with a stamp duty barrister, contact Cannon Chambers here.

How Much Is Stamp Duty on a Second Home?

Stamp duty on a second home is based on a 3% increase on the standard stamp duty rates. These are based on the property purchase price and can be worked out using an online stamp duty calculator. Please note that the thresholds for rates of SDLT have been altered due to Covid-19 – dates of revisions are listed below.

SDLT Second Home Rates

PROPERTY VALUE
STANDARD STAMP DUTY CHARGEADDITIONAL PROPERTY STAMP DUTY CHARGE
£0-£500,0000%3%
£500,000 – £925,0005%8%
£925,000 – £1.5m10%13%
£1.5m+12%15%

NB These rates are relevant until 30th June 2021.

Between 1 July and 30 September 2021, the following rates apply to second homes:

  • Up to £250,000: 3%
  • On the portion from £250,001 to £925,000: 8%
  • On the portion from £925,001 to £1.5 million: 13%
  • Above £1.5 million: 15%

From 1 October 2021, the 3% additional rates on second homes apply on top of the standard rates of stamp duty. HMRC publish an SDLT calculator that can be used to compute the SDLT although it does not cover all eventualities and care should be taken for any out of the ordinary transactions.

How Does the Stamp Duty Holiday Affect the Non-UK Resident Stamp Duty Surcharge?

From 1 April 2021 the non-UK resident stamp duty surcharge applies at a rate of 2% above the stamp duty residential rates (including the higher rates for additional dwellings and companies, the 15% rate and the first-time buyers’ rates) on residential property bought by non-residents. The 2% charge applies whether or not the stamp duty holiday applies.

This is in addition to the existing 3% higher rates surcharge which most foreigners already pay because they already own one or more residential properties overseas. So, SDLT for overseas buyers can be at a top rate of 17% of the purchase price. This will be either a flat rate of 17% in the case of the existing 15% higher rate on companies buying a dwelling or in other cases, on the top slice of the purchase price above £1.5m.

Can You Avoid Stamp Duty on a Second Home?

There are some legitimate ways that you can avoid SDLT on a second home, but you should be wary that many mitigation schemes are not legal, and you could end up facing an investigation or even court action from HMRC if you have bought into such a scheme.

Stamp Duty Exemptions on Second Homes

You may be exempt from the additonal rate of SDLT on second homes if you’re buying:

  • another home during a divorce or separation
  • a mixed-use 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)

Social landlords and charities are also exempt from the 3% surcharge.

Can You Claim Back Stamp Duty on a Second Home?

Yes, in some circumstances, you can claim back the surcharge on a second home.

If you buy a new main residence before you have sold your previous home, you will have to pay the extra 3% surcharge, but then have 36 months to claim it back, once you’ve sold or gifted your original property.

In some cases, you may realise after the purchase of your second home that you were eligible for exemption of the 3% surcharge.

Stamp Duty Refund on Second Homes

If you think you can claim for a stamp duty refund on a second home, you can enter your claim on HMRC’s website, or you can appoint a tax barrister to manage the refund claim.

What is the Time Limit for Changing SDLT Returns?

You have 14 days to submit your return after your purchase. After an SDLT return has been submitted, you have 12 months to amend it.

How Can Cannon Chambers Help?

Cannon Chambers is an experienced tax chambers providing expert guidance and representation in all areas of Stamp Duty Land Tax. Our barristers are happy to consult with you via video or in person. For more information or to book an appointment, contact us here.

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