The stamp duty second home surcharge adds 5% to your stamp duty bill when buying an additional property. Here’s exactly how it works, who pays it, and how to avoid or reclaim it.
For the wider cluster covering SDLT, first-time-buyer relief, Scottish LBTT and Welsh LTT, use the main Stamp Duty UK hub.
How the Surcharge Works
The 5% surcharge is added on top of standard stamp duty (SDLT) rates across all bands. It applies to the entire purchase price, not just the portion above a threshold.
Standard vs Surcharge Rates
| Property Price Band | Standard SDLT Rate | With 5% Surcharge |
|---|---|---|
| Up to £250,000 | 0% | 5% |
| £250,001 - £925,000 | 5% | 10% |
| £925,001 - £1,500,000 | 10% | 15% |
| Over £1,500,000 | 12% | 17% |
Worked Examples
| Property Price | Standard SDLT | With Surcharge | Total Extra Cost |
|---|---|---|---|
| £200,000 | £0 | £10,000 | £10,000 |
| £250,000 | £0 | £12,500 | £12,500 |
| £300,000 | £2,500 | £17,500 | £15,000 |
| £400,000 | £7,500 | £27,500 | £20,000 |
| £500,000 | £12,500 | £37,500 | £25,000 |
Detailed Calculation — £300,000 Second Property
| Band | Amount in Band | Standard Rate | Surcharge Rate | Tax |
|---|---|---|---|---|
| £0-£250,000 | £250,000 | 0% | 5% | £12,500 |
| £250,001-£300,000 | £50,000 | 5% | 10% | £5,000 |
| Total | £17,500 |
Without the surcharge, that same £300,000 property would cost just £2,500 in stamp duty.
Who Pays the Surcharge?
You pay the 5% surcharge if at the end of the day of purchase you own two or more residential properties. This includes:
| Scenario | Surcharge? | Notes |
|---|---|---|
| Buying a buy-to-let property | Yes | Classic additional property |
| Buying a holiday home / second home | Yes | Additional residential property |
| Buying new home before selling old one | Yes* | *Refund available within 36 months |
| Buying a property while owning abroad | Yes | Worldwide property ownership counts |
| Inheriting a property, then buying | Depends | Only if inherited share is 50%+ |
| Buying with someone who owns a property | Yes | If either buyer owns another property |
| Buying a property worth under £40,000 | No | Threshold exemption |
| Buying a non-residential property | No | Commercial property has separate rates |
| Replacing your only main residence | No | Direct replacement exempt |
When You Can Get a Refund
If you bought a new main residence before selling your old one, you can reclaim the surcharge — provided:
- You sell the old property within 36 months of buying the new one
- The old property was your main residence
- You intended the new property to be your replacement main residence
- You apply to HMRC for a refund within 12 months after selling the old property (or 12 months after the filing date)
How to Claim
- Complete HMRC’s online stamp duty refund form
- Provide details of both transactions (purchase and sale)
- HMRC typically processes refunds within 15 working days
- The refund includes any interest owed
Exemptions
The surcharge does not apply in these circumstances:
| Exemption | Details |
|---|---|
| Property under £40,000 | Total purchase price below £40,000 |
| Caravans, mobile homes, houseboats | Not treated as residential for SDLT purposes |
| Replacing main residence | Direct swap — sell one, buy one (no overlap) |
| Non-residential property | Commercial, agricultural, mixed-use |
| Buying after divorce/separation | Court order transfers may be exempt |
| Inherited property (minor share) | If inherited share is less than 50% |
Scotland and Wales — Different Rules
Scotland (LBTT Additional Dwelling Supplement)
Scotland charges its own additional dwelling supplement (ADS) of 8% (higher than England’s 5%):
| Property Price | LBTT | With 8% ADS | Total |
|---|---|---|---|
| £200,000 | £1,100 | £16,000 | £17,100 |
| £300,000 | £4,600 | £24,000 | £28,600 |
| £400,000 | £14,600 | £32,000 | £46,600 |
Scotland’s ADS is significantly more expensive than England’s surcharge.
Wales (LTT Higher Rates)
Wales charges a 5% surcharge (slightly different rate structure from England):
| Property Price | LTT | With Surcharge | Total |
|---|---|---|---|
| £200,000 | £1,500 | £10,000 | £11,500 |
| £300,000 | £5,000 | £15,000 | £20,000 |
| £400,000 | £11,150 | £20,000 | £31,150 |
Impact on Buy-to-Let Investors
The surcharge significantly affects investment property returns:
| Property Price | Total Stamp Duty (incl. surcharge) | As % of Purchase Price |
|---|---|---|
| £200,000 | £10,000 | 5.0% |
| £250,000 | £12,500 | 5.0% |
| £300,000 | £17,500 | 5.8% |
| £400,000 | £27,500 | 6.9% |
| £500,000 | £37,500 | 7.5% |
For a £300,000 buy-to-let earning £15,000/year rent, the £17,500 stamp duty represents over a year of rental income.
Strategies to Manage the Surcharge
Timing Your Sale
- If buying a replacement home, try to sell before or simultaneously with your purchase
- You have 36 months to sell and claim a refund — but tying up £15,000-£25,000+ in the meantime affects your cash flow
Company Purchase
- Some investors buy through a limited company to claim mortgage interest relief
- The surcharge still applies to company purchases of residential property
- An additional 15% rate applies to residential purchases by companies over £500,000 in certain circumstances
Transferring to a Spouse
- Transfers between spouses/civil partners are usually exempt from stamp duty
- This doesn’t help avoid the surcharge if the spouse also already owns property