Second Home Council Tax Premium: The 100% Surcharge Explained (2026/27)

What changed in April 2025

The Levelling-up and Regeneration Act 2023 gave English councils a new discretionary power: to charge a council tax premium of up to 100% on furnished properties that are nobody's sole or main residence, commonly known as second homes. This premium took effect from 1 April 2025, following a required one-year notice period for affected owners, and sits alongside (but is distinct from) the long-standing empty homes premium for unfurnished, unoccupied properties.

The policy is aimed primarily at areas with high concentrations of holiday homes — much of the South West, the Lake District, and parts of Wales and Scotland — where local campaigners argued that second homes were pricing out local residents and hollowing out year-round communities.

Worked example 1: A Cornwall holiday cottage

James owns a furnished holiday cottage in a Cornish coastal town, valued in council tax Band D, where the standard annual bill is £2,250. His local council has adopted the 100% second home premium.

• Standard Band D council tax: £2,250
• Second home premium (100%): +£2,250
• Total annual council tax: £4,500

If James does not actively let the property commercially, this is a straightforward doubling of his bill, adding £2,250 a year to the cost of owning the cottage.

Worked example 2: Converting to a furnished holiday let for business rates

Sarah owns a similar cottage and decides to let it commercially, ensuring it is available for letting at least 210 days a year and actually let for at least 105 days, the standard threshold used for business rates reclassification. Once reclassified for business rates rather than council tax:

• Rateable value assessed at, say, £6,000
• Small Business Rate Relief may reduce the rates bill to £0 if the rateable value is below the relief threshold, subject to eligibility rules

This example shows the significant financial difference between an occasional-use second home (liable for the council tax premium) and a genuinely and heavily let holiday business (potentially liable for £0 in business rates via relief) — though it comes with real letting obligations and, since the abolition of the Furnished Holiday Letting tax regime, no longer carries the income tax advantages FHL status used to bring.

Worked example 3: A city pied-à-terre

Michael keeps a small flat in Leeds for weekday work stays, returning to his family home in Manchester at weekends. His council tax on the Leeds flat (Band B, roughly £1,600 standard) attracts the 100% premium because it is furnished and not his sole or main residence.

• Standard Band B council tax: £1,600
• Premium: +£1,600
• Total: £3,200/year

Michael's situation illustrates that the premium is not limited to rural holiday-home hotspots — any furnished property that is not your main residence can be caught, including city flats used for work.

Comparing second home premium vs empty homes premium

Budgeting for a second home purchase in 2026/27

If you are considering buying a second home, the council tax premium is an ongoing cost on top of the 5% Stamp Duty Land Tax surcharge that applies to additional residential properties at purchase. Use a Stamp Duty Calculator to work out the upfront tax on the purchase, and a Mortgage Calculator to model the monthly repayment cost, then add your council's specific council tax premium rate to get a realistic total cost of ownership before you commit.

What to do if you own a second home

1. Check your specific council's website to see if it has adopted the premium and from what date.
2. Consider whether reclassifying as a genuine furnished holiday let (meeting the letting-day thresholds) could move you to business rates instead.
3. Check for exemptions — job-related occupation, annexes, probate periods and marketing for sale can all provide relief.
4. Factor the premium into your annual budget alongside the SDLT surcharge paid at purchase and any mortgage costs.

Sources

• gov.uk: Council Tax premiums on second homes and empty properties
• Levelling-up and Regeneration Act 2023 (legislation.gov.uk)
• gov.uk: Business rates relief for small businesses