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With property values increasing, property investment is as popular as ever, however buying a second or additional home usually carries a 3% surcharge, on top of the standard rate of Stamp Duty Land Tax (SDLT).
There are several exemptions and reliefs which could save you money. Our tax team can guide you through the options, ensuring that you or your business are compliant with HMRC regulations, whilst also making you aware of any reliefs available to you.
SDLT on second homes is charged as follows:
You can calculate how much SDLT you owe on a second home, using HMRC’s online calculator here.
Exemptions from the surcharge:
There are also a number of exemptions from the 3% surcharge to be aware of, such as the following:
- An additional home costing less than £40,000
- Another home bought during a divorce or separation
- A mixed-use property (i.e., part of, or above a commercial property)
- A second or additional home to be used as your main residence (in which case, you must have sold your previous main residence)
- A property bought from an employee by an employer
- The property is uninhabitable at the time of purchase
- Social landlords and charities are also exempt from the 3% higher rates on additional residential homes
Each exemption has specific criteria to be met and we can guide you through these.
Other reliefs
If you buy a home with an annexe or if you buy more than one home in one transaction, or as part of a linked transaction, you can claim Multiple Dwellings Relief. This can represent a significant reduction in the amount of SDLT normally paid on additional homes.
Reclaiming the additional 3% if you later sell your previous main residence
A claim for repayment must be submitted by the later of two dates:
1) 12 months from the date of disposal of the previous main residence
2) The filing date for the return due on the purchase of the new residence
However, if you are outside this timeframe, we can still help you reclaim the overpaid SDLT.
If you have any concerns regarding SDLT our expert team can offer advice so please don’t hesitate to get in touch or visit one of our offices in Dalston, Dumfries, Penrith or Workington.
