HOW TO CLAIM & AVOID STAMP DUTY ON SECOND HOME UK 2024
Tom Condon
December 7th, 2023
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When purchasing a residential property in England and Wales 2024, you will be liable to pay Stamp Duty Land Tax (SDLT). This tax has been around since the Hundred Year war, and has evolved over the years. Many homeowners are often surprised that there is an additional stamp duty on second homes.
If you are purchasing an additional residential property, such as a second home or a buy-to-let investment you will be subject to a higher rate of SDLT. The higher stamp duty on second home rate is an additional percentage applied on top of the standard Stamp Duty rates for residential properties.
However, if the property you are buying is replacing your main home and the sale of your previous main residence has been completed then you may be eligible for a refund of the higher rate.
In this article we will cover all things claiming and avoiding Stamp Duty landlords in 2024.
Stamp Duty Land Tax must be paid when a person buys property or piece of land over a set price in England and Northern Ireland. The threshold changes depending on Government initiatives and budgets, so it’s important to keep up with the latest legislation.
The tax paid is different depending on which country you live in, Scotland pays Land and Buildings Transaction Tax whereas Wales pays Land Transaction Tax if the sale was completed on or after April 2018.
Who needs to pay Stamp Duty?
You will need to pay Stamp Duty if you have bought a freehold property, a new or existing leasehold, a property through a shared ownership scheme and if you have transferred land or property in exchange for payment.
What are the Stamp Duty thresholds?
There are a few different levels of thresholds for stamp duty in the UK, if you purchase a property lower than the thresholds, you are not liable for SDLT.
Here are the thresholds:
- £250,000 for residential properties
- £425,000 for first time buyers buying a residential property worth £625,000 or less.
- £150,000 for non-residential land and properties.
But, the amount you pay will also depend on whether the land or property will be used as a residential property or as a non residential or mixed use property. As well as if you are eligible for a stamp duty exemption.
When do you need to pay Stamp Duty?
If you are liable for Stamp Duty then you will need to send an SDLT return to HMRC and pay the tax within 14 days of completion on the property. If you have a solicitor, agent or conveyancer, they will do this on your behalf.
Need help with your taxes? We can help! As the UK’s leading property sourcing company, we have over a century of combined experience buying and selling properties and guide you through the process. Join us!
Unfortunately, any property which has been purchased in addition to a main residence is counted as a second home, even if it is being rented out to another.
If you are a buy-to-let landlord, you will need to pay Stamp Duty, and unfortunately the rates are much higher than standard house transactions. If your property is worth more than £40,000, and the purchase will mean you own more than one property, you will be liable for Additional SDLT Rates in England and Northern Ireland.
The additional property stamp duty on second home rate is a minimum 3% extra charge on top of the standard SDLT rate, which is levied when you are buying a property that results in you having more than one i.e. when you buy a buy-to-let property.
Here are the Buy-To-Let Stamp Duty rates in England and Northern Ireland:
| Property Purchase Price | SDLT Rate | Additional SDLT Rate |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
| Property Purchase Price | SDLT Rate | Additional SDLT Rate |
|---|---|---|
| Up to £180,000 | 0% | 4% |
| £180,001 – £250,000 | 3.5% | 7.5% |
| £250,001 – £400,000 | 5% | 9% |
| £400,001 – £750,000 | 7.5% | 11.5% |
| £750,001 – £1.5 million | 10% | 14% |
| Over £1.5 million | 12% | 16% |
There are no stamp duty land tax exemptions when purchasing a buy to let property as a limited company. But, if you already own a buy to let property and decide to create a limited company, then you will need to pay SDLT again as you will have to sell the property to the limited company.
What about non-residential and mixed use property stamp duty landlords rate?
If you purchase a property for more than £150,000 then you will pay SDLT on the increasing portions of the property price, but you will still need to send a Stamp Duty Land Tax return for most transactions under £150,000.
If you purchase a freehold non-residential or mixed use property, then the stamp duty rates are as follows:
| Property Or Lease Premium | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 – £250,000 | 2% |
| Over £250,000 | 5% |
If you purchase a leasehold non-residential or mixed use property, you will need to pay stamp duty on both the purchase price of the lease and the value of the annual rent.
You will not have to pay SDLT on the value of the annual rent you pay (Net Present Value) if it’s less than £150,000. Here are the other stamp duty rates for leasehold non-residential or mixed use properties:
- Net Present Value is below £150,000 – 0% SDLT rate
- £150,001 – £5 million – 1% SDLT rate
- Over £5 million – 2% SDLT rate
Are there any landlord Stamp Duty exemptions 2024?
While there are no stamp duty landlords exemptions for properties under £40,000, if the property is a caravan, mobile home or houseboat, it will be completely excluded from SDLT.
Furthermore, the property may be liable for Multiple Dwellings relief, if you are purchasing multiple properties as part of a single transaction.
Do tenants need to pay Stamp Duty?
Tenants who live in rented accommodation and pay substantial annual rental amounts may need to pay Stamp Duty and if they don’t they could be fined by HMRC.
Stamp Duty for tenants is only on rents that exceed £125,000 and is charged at 1% on any amount over and above this threshold.
Who is responsible for paying rental property stamp duty?
The responsibility for paying the SDLT on tenant rent will fall solely on the tenant who is paying £125,000 or more a year. But, the landlord will be responsible for paying the Stamp Duty when they purchase the rental property.
If you are looking to purchase a second property, this is known as purchasing a property and owning interest in another property, which means that you are liable for an additional rate of stamp duty on the second home.
In order to avoid this additional SDLT rate, you will need to do any of the following:
- Exclude anyone from the legal title who owns an interest in another property.
- Use a Joint Mortgage Sole Proprietor Mortgage if you are on the mortgage but not on the legal title.
- Purchase a property for under £40,000.
How do you avoid extra 3% Stamp Duty?
If you want to avoid the extra 3% stamp duty rate, you will need to either purchase a property for under £40,000 or opt for an alternative type of home like a houseboat or motorhome.
You may also refund your stamp duty on second home if you manage to sell your main residence within 3 years of purchasing the new property. Other than that, there are very few ways to avoid the additional SDLT rates.
Is it illegal to avoid Stamp Duty?
If you avoid Stamp Duty or conspire to avoid it, you are committing a serious criminal offence and will face criminal action as a result.
However, looking for ways to reduce SDLT through exemptions is a totally legal practice and widely used across the homeownership and investment industries.
When is the additional Stamp Duty rate applicable for second homes?
Unfortunately the additional property stamp duty on second home rate is applicable to almost every kind of home imaginable, and every scenario:
If you are buying a property with your spouse, partner or friend, but they already own a property or are in the process of selling it but are still the legal owner of it, then you will be liable for the additional property stamp duty rate.
If you wish to only put the one person who does not own property, down on the title deeds as the legal owner, then you may fall into complications with the mortgage application process.
This is because the mortgage lender will need the person on the title deeds to pass their affordability tests alone.
While buying a property for someone else, like your children, can be a great idea to get someone on to the property ladder, it does make you liable for the stamp duty on second home rate as you are the name on the title deeds.
One way around this is to put yourself down simply as the guarantor or gift the deposit, both of which will avoid stamp duty charges. Alternatively, you could also take out a family offset mortgage.
If you own a property abroad, but no property in the UK, you are still liable for the additional property stamp duty on second home rate.
If you are the sole owner of an inherited property and you decide to buy another home, you will face the stamp duty on second home rate. But, if you have been left half a share or less then you may be entitled to an exemption.
Lease extensions are legally considered the same as any other property purchase which therefore means you are liable for the additional SDLT costs.
For people with second homes, or interest in another property, the threshold is set lower at £40,000. But, if you are extending the lease on your main residence then you will be exempt.
Unfortunately, the government has made stamp duty a liable tax for almost every form of property transaction and there aren’t many ‘loopholes’ as it were.
But, there are some stamp duty exemptions which may be advantageous for landlords:
First-time buyers
If you are a first time buyer you don’t need to pay any buy-to-let stamp duty rates. But, you won’t qualify for the first time buyer stamp duty exemption either as this only applies to people who intend to live within the property.
If you decide to follow this route, then you will need to pay the standard home mover SDLT rates.
Married couple and civil partners
To avoid additional property stamp duty rates, married couples and civil partners are counted as one entity and are therefore treated as one person for stamp duty purposes.
Unmarried couples
If you want to avoid additional stamp duty rates and are purchasing with someone who already has interest in a property, but you are unmarried, then you will need to put the title deeds in your name.
However, this will then mean that you are treated as one person, and it may be harder for a lender to approve the affordability test as there is only one source of income.
Moving house
If you are purchasing a new property before selling your old one, then you will be liable to the additional property stamp duty rates. But, you will be able to claim this back if you sell the property within 36 months of purchasing the new one.
New builds
Some property developers will offer discounts and benefits in order to attract new buyers. If you are looking to purchase the property and it is above the stamp duty threshold then the developer may cover the SDLT for you.
Fixtures and fittings
If you are buying a property then you could haggle with the current seller and purchase any fixtures and fittings separately so they are not taxable or attached to the property purchase. But, you will want to talk to your solicitor before doing this as HMRC are quite tough on how much is ‘reasonable’.
Buying with cash is pretty similar to a typical property purchase, but of course, you don’t have to jump through the hoops of getting mortgage approval which means the sale is a lot less likely to fall through as issues are common with mortgage providers.
The whole process is a little more straight forward and less stressful, and it’s also appealing to people who are selling as it typically means that you can buy quicker than someone with a mortgage, but we’ll dig more into that in the pros and cons section!
If you want to reduce the amount of SDLT you pay, there are numerous different avenues you can take, depending on your situation and the amount of properties you own.
The easiest way to reduce stamp duty is to haggle on the property price, as if you are successful then you will be able to lower the SDLT threshold and reduce the amount of stamp duty you are liable to pay.
While it is illegal to actively avoid stamp duty, there are some exemptions which may be applicable to your situation. These include:
- First time buyer exemptions
- Shared ownership
- Buying in a different name
If you put your child’s name on the house title then you will avoid stamp duty but your child will need to pay it instead, as they are the legal owner of the property. Not only this, but the mortgage lender will need proof of funds from your child in order to show that they will be able to keep up with the mortgage repayments.
You can claim back stamp duty on second home if you are eligible for a refund, which usually happens when someone purchases a property that wasn’t immediately inhabitable when you completed the property.
This means that if you were to take out a mortgage on the second home, but the property has been declared uninhabitable, then you could be eligible for a stamp duty on second home refund for anything you have paid on the house already.
If your home has been deemed uninhabitable, then you may be entitled to a stamp duty refund. It is always recommended that you seek legal and financial advice to confirm you fit the criteria.
If you are a landlord, or a landlord-to-be, you should always seek the advice of a financial advisor or your solicitor in order to get an accurate picture of how much stamp duty you need to pay and if you are entitled to any exemptions.
Alternatively, you could contact one of our team here at The Property Sourcing Company who are trained in all aspects of property investment! Want to find out more about our services? Read below!
Start your property portfolio today!
When purchasing a residential property in England and Wales 2024, you will be liable to pay Stamp Duty Land Tax (SDLT). This tax has been around since the Hundred Year war, and has evolved over the years. Many homeowners are often surprised that there is an additional stamp duty on second homes.
If you are purchasing an additional residential property, such as a second home or a buy-to-let investment you will be subject to a higher rate of SDLT. The higher stamp duty on second home rate is an additional percentage applied on top of the standard Stamp Duty rates for residential properties.
However, if the property you are buying is replacing your main home and the sale of your previous main residence has been completed then you may be eligible for a refund of the higher rate.
In this article we will cover all things claiming and avoiding Stamp Duty landlords in 2024.
Stamp Duty Land Tax must be paid when a person buys property or piece of land over a set price in England and Northern Ireland. The threshold changes depending on Government initiatives and budgets, so it’s important to keep up with the latest legislation.
The tax paid is different depending on which country you live in, Scotland pays Land and Buildings Transaction Tax whereas Wales pays Land Transaction Tax if the sale was completed on or after April 2018.
Who needs to pay Stamp Duty?
You will need to pay Stamp Duty if you have bought a freehold property, a new or existing leasehold, a property through a shared ownership scheme and if you have transferred land or property in exchange for payment.
What are the Stamp Duty thresholds?
There are a few different levels of thresholds for stamp duty in the UK, if you purchase a property lower than the thresholds, you are not liable for SDLT.
Here are the thresholds:
- £250,000 for residential properties
- £425,000 for first time buyers buying a residential property worth £625,000 or less.
- £150,000 for non-residential land and properties.
But, the amount you pay will also depend on whether the land or property will be used as a residential property or as a non residential or mixed use property. As well as if you are eligible for a stamp duty exemption.
When do you need to pay Stamp Duty?
If you are liable for Stamp Duty then you will need to send an SDLT return to HMRC and pay the tax within 14 days of completion on the property. If you have a solicitor, agent or conveyancer, they will do this on your behalf.
Need help with your taxes? We can help! As the UK’s leading property sourcing company, we have over a century of combined experience buying and selling properties and guide you through the process. Join us!
Unfortunately, any property which has been purchased in addition to a main residence is counted as a second home, even if it is being rented out to another.
If you are a buy-to-let landlord, you will need to pay Stamp Duty, and unfortunately the rates are much higher than standard house transactions. If your property is worth more than £40,000, and the purchase will mean you own more than one property, you will be liable for Additional SDLT Rates in England and Northern Ireland.
The additional property stamp duty on second home rate is a minimum 3% extra charge on top of the standard SDLT rate, which is levied when you are buying a property that results in you having more than one i.e. when you buy a buy-to-let property.
Here are the Buy-To-Let Stamp Duty rates in England and Northern Ireland:
| Property Purchase Price | SDLT Rate | Additional SDLT Rate |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
| Property Purchase Price | SDLT Rate | Additional SDLT Rate |
|---|---|---|
| Up to £180,000 | 0% | 4% |
| £180,001 – £250,000 | 3.5% | 7.5% |
| £250,001 – £400,000 | 5% | 9% |
| £400,001 – £750,000 | 7.5% | 11.5% |
| £750,001 – £1.5 million | 10% | 14% |
| Over £1.5 million | 12% | 16% |
There are no stamp duty land tax exemptions when purchasing a buy to let property as a limited company. But, if you already own a buy to let property and decide to create a limited company, then you will need to pay SDLT again as you will have to sell the property to the limited company.
What about non-residential and mixed use property stamp duty landlords rate?
If you purchase a property for more than £150,000 then you will pay SDLT on the increasing portions of the property price, but you will still need to send a Stamp Duty Land Tax return for most transactions under £150,000.
If you purchase a freehold non-residential or mixed use property, then the stamp duty rates are as follows:
| Property Or Lease Premium | SDLT Rate |
|---|---|
| Up to £150,000 | 0% |
| £150,001 – £250,000 | 2% |
| Over £250,000 | 5% |
If you purchase a leasehold non-residential or mixed use property, you will need to pay stamp duty on both the purchase price of the lease and the value of the annual rent.
You will not have to pay SDLT on the value of the annual rent you pay (Net Present Value) if it’s less than £150,000. Here are the other stamp duty rates for leasehold non-residential or mixed use properties:
- Net Present Value is below £150,000 – 0% SDLT rate
- £150,001 – £5 million – 1% SDLT rate
- Over £5 million – 2% SDLT rate
Are there any landlord Stamp Duty exemptions 2024?
While there are no stamp duty landlords exemptions for properties under £40,000, if the property is a caravan, mobile home or houseboat, it will be completely excluded from SDLT.
Furthermore, the property may be liable for Multiple Dwellings relief, if you are purchasing multiple properties as part of a single transaction.
Do tenants need to pay Stamp Duty?
Tenants who live in rented accommodation and pay substantial annual rental amounts may need to pay Stamp Duty and if they don’t they could be fined by HMRC.
Stamp Duty for tenants is only on rents that exceed £125,000 and is charged at 1% on any amount over and above this threshold.
Who is responsible for paying rental property stamp duty?
The responsibility for paying the SDLT on tenant rent will fall solely on the tenant who is paying £125,000 or more a year. But, the landlord will be responsible for paying the Stamp Duty when they purchase the rental property.
If you are looking to purchase a second property, this is known as purchasing a property and owning interest in another property, which means that you are liable for an additional rate of stamp duty on the second home.
In order to avoid this additional SDLT rate, you will need to do any of the following:
- Exclude anyone from the legal title who owns an interest in another property.
- Use a Joint Mortgage Sole Proprietor Mortgage if you are on the mortgage but not on the legal title.
- Purchase a property for under £40,000.
How do you avoid extra 3% Stamp Duty?
If you want to avoid the extra 3% stamp duty rate, you will need to either purchase a property for under £40,000 or opt for an alternative type of home like a houseboat or motorhome.
You may also refund your stamp duty on second home if you manage to sell your main residence within 3 years of purchasing the new property. Other than that, there are very few ways to avoid the additional SDLT rates.
Is it illegal to avoid Stamp Duty?
If you avoid Stamp Duty or conspire to avoid it, you are committing a serious criminal offence and will face criminal action as a result.
However, looking for ways to reduce SDLT through exemptions is a totally legal practice and widely used across the homeownership and investment industries.
When is the additional Stamp Duty rate applicable for second homes?
Unfortunately the additional property stamp duty on second home rate is applicable to almost every kind of home imaginable, and every scenario:
If you are buying a property with your spouse, partner or friend, but they already own a property or are in the process of selling it but are still the legal owner of it, then you will be liable for the additional property stamp duty rate.
If you wish to only put the one person who does not own property, down on the title deeds as the legal owner, then you may fall into complications with the mortgage application process.
This is because the mortgage lender will need the person on the title deeds to pass their affordability tests alone.
While buying a property for someone else, like your children, can be a great idea to get someone on to the property ladder, it does make you liable for the stamp duty on second home rate as you are the name on the title deeds.
One way around this is to put yourself down simply as the guarantor or gift the deposit, both of which will avoid stamp duty charges. Alternatively, you could also take out a family offset mortgage.
If you own a property abroad, but no property in the UK, you are still liable for the additional property stamp duty on second home rate.
If you are the sole owner of an inherited property and you decide to buy another home, you will face the stamp duty on second home rate. But, if you have been left half a share or less then you may be entitled to an exemption.
Lease extensions are legally considered the same as any other property purchase which therefore means you are liable for the additional SDLT costs.
For people with second homes, or interest in another property, the threshold is set lower at £40,000. But, if you are extending the lease on your main residence then you will be exempt.
Unfortunately, the government has made stamp duty a liable tax for almost every form of property transaction and there aren’t many ‘loopholes’ as it were.
But, there are some stamp duty exemptions which may be advantageous for landlords:
First-time buyers
If you are a first time buyer you don’t need to pay any buy-to-let stamp duty rates. But, you won’t qualify for the first time buyer stamp duty exemption either as this only applies to people who intend to live within the property.
If you decide to follow this route, then you will need to pay the standard home mover SDLT rates.
Married couple and civil partners
To avoid additional property stamp duty rates, married couples and civil partners are counted as one entity and are therefore treated as one person for stamp duty purposes.
Unmarried couples
If you want to avoid additional stamp duty rates and are purchasing with someone who already has interest in a property, but you are unmarried, then you will need to put the title deeds in your name.
However, this will then mean that you are treated as one person, and it may be harder for a lender to approve the affordability test as there is only one source of income.
Moving house
If you are purchasing a new property before selling your old one, then you will be liable to the additional property stamp duty rates. But, you will be able to claim this back if you sell the property within 36 months of purchasing the new one.
New builds
Some property developers will offer discounts and benefits in order to attract new buyers. If you are looking to purchase the property and it is above the stamp duty threshold then the developer may cover the SDLT for you.
Fixtures and fittings
If you are buying a property then you could haggle with the current seller and purchase any fixtures and fittings separately so they are not taxable or attached to the property purchase. But, you will want to talk to your solicitor before doing this as HMRC are quite tough on how much is ‘reasonable’.
Buying with cash is pretty similar to a typical property purchase, but of course, you don’t have to jump through the hoops of getting mortgage approval which means the sale is a lot less likely to fall through as issues are common with mortgage providers.
The whole process is a little more straight forward and less stressful, and it’s also appealing to people who are selling as it typically means that you can buy quicker than someone with a mortgage, but we’ll dig more into that in the pros and cons section!
If you want to reduce the amount of SDLT you pay, there are numerous different avenues you can take, depending on your situation and the amount of properties you own.
The easiest way to reduce stamp duty is to haggle on the property price, as if you are successful then you will be able to lower the SDLT threshold and reduce the amount of stamp duty you are liable to pay.
While it is illegal to actively avoid stamp duty, there are some exemptions which may be applicable to your situation. These include:
- First time buyer exemptions
- Shared ownership
- Buying in a different name
If you put your child’s name on the house title then you will avoid stamp duty but your child will need to pay it instead, as they are the legal owner of the property. Not only this, but the mortgage lender will need proof of funds from your child in order to show that they will be able to keep up with the mortgage repayments.
You can claim back stamp duty on second home if you are eligible for a refund, which usually happens when someone purchases a property that wasn’t immediately inhabitable when you completed the property.
This means that if you were to take out a mortgage on the second home, but the property has been declared uninhabitable, then you could be eligible for a stamp duty on second home refund for anything you have paid on the house already.
If your home has been deemed uninhabitable, then you may be entitled to a stamp duty refund. It is always recommended that you seek legal and financial advice to confirm you fit the criteria.
If you are a landlord, or a landlord-to-be, you should always seek the advice of a financial advisor or your solicitor in order to get an accurate picture of how much stamp duty you need to pay and if you are entitled to any exemptions.
Alternatively, you could contact one of our team here at The Property Sourcing Company who are trained in all aspects of property investment! Want to find out more about our services? Read below!
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