How to Avoid Stamp Duty on Second Home?

Stamp duty on second home

Are you going to buy a second home for yourself and you don’t want to pay higher stamp duties? If your answer is positive, you are most probably looking for the answer to your question of how to avoid stamp duty on a second home. Don’t worry! We have got you covered as this reading will really help you by giving the exact answer to your question and you can learn ways to avoid stamp duty on a second home. Many people in the United Kingdom have to pay higher SDLT rates for buying an additional or second home.

However, there are certain ways you can follow to prevent the HMRC from charging you higher SDLT rates. Let’s start our discussion of how you can keep away from the stamp duty on your second home.


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What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax is levied by the HMRC by the property owners who are buying a residential or commercial property. However, this liability is applicable only after certain requirements are fulfilled.

For example, if you buy a property worth £125 000 for residential purposes, then you are not required to pay SDLT. However, if you buy a second home, you have to pay an additional 3% surcharge on the standard rates of SDLT.

SDLT is levied on the purchase price of the property. In the case of a commercial property, stamp duty is also applicable to the Net Present Value of the commercial property.


Stamp Duty Land Tax (SDLT) Rates on Buying a Second Home

The Stamp Duty rates for the second-time home buyer are different from the standard rates of SDLT. This is because they are owning an additional residential place. So, HMRC charges them an extra 3% on each standard threshold. Following is a list of all the standard and additional SDLT rates:

Threshold Standard SDLT Rates Second Homer Buyer SDLT Rates
£0 – £125 000 0% 3%
£125 001 – £295 000 2% 5%
£295 001 – £925 000 5% 8%
£925001 – £1.5 million 10% 13%
Above £1.5 million 12% 15%

Besides, if you are not a resident of the United Kingdom, you are liable to pay an additional 2% on the purchase of residential property in the UK.


How to Avoid Stamp Duty on Second Home?

There are certain ways in which a property owner buying a second home for himself can avoid paying higher SDLT rates in the UK. So, there are some general rules that apply to both first and second home buyers.


You are Divorced and Separated from your Partner

If you have a civil partner who has got separated from you, then you can buy a second home without paying SDLT unless the property owner has been transferred to the other divorcee. For this, you need to have a Property Placement Order when your divorce work is complete. Otherwise, you will pay a stamp duty while buying a second home.


You have Received Home as a Part of a will

Secondly, if you have received a second home as a part of your will, you won’t pay Stamp duty on your purchase price. If you have inherited property less than 50% of its share, you would not pay SDLT on it. If the inherited property has a share of more than 50%, you will be charged with the SDLT rates.


You give Someone a Property as a Second Gift

Thirdly, if you give someone your second home as a gift. For example, you can deposit money as a gift to your children or an elder member of your home who does not own any property, then they can buy their first home without paying stamp duty rates.

Besides, you can also get a second home with the help of a bank and your family member who will apply for a mortgage and you can deposit money in the bank.

In another scenario, you can become a guarantor of another family member who will buy a home on their own and you would be responsible for making payments on their behalf.


The Property Value is Less than £40 000

However, there are other ways that lead you to avoid paying this stamp duty to the HMRC. For example, if the purchase price is less than £40 000, the standard or additional rates won’t apply to this price.


You Buy a Property that is Movable like a Motor Home or a Home Boat.

If you buy a movable property, you won’t pay HMRC and SDLT rates. SDLT rates only apply to immovable properties. motor homes and home boats are considered.


Purchase a Property as Buy-to-let Property as a First-Time Buyer

In the same way, if you purchase a buy-to-let property as a first-home buyer, you won’t pay SDLT to the HMRC. A person can buy a buy-to-let property as an investment and it will not be considered a second home or residence.

Nonetheless, if you buy this property with a partner who owns a home then you have to pay the stamp duty as a second home buyer.



Finally, we can say that second home buyers are able to avoid stamp duty on a second home in certain ways. Before you buy a second, you need to consider all of these options. So that you get the most out of it. On the other hand, you can claim a stamp duty refund if you have sold your house within three years of buying a second home. You will be charged with a penalty if you fail to make these payments to HMRC. I hope you have found the answer to ‘how to avoid stamp duty on second home’.


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Disclaimer: All the information provided in this article on How To Avoid Stamp Duty on Second Home, including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.