Property & Tax · 2026/27

Buying a Second Home in the UK: Tax Guide 2026/27

Buying a second home, holiday home or buy-to-let in the UK comes with a significant tax cost that catches many buyers out. You pay a 5% Stamp Duty Land Tax surcharge on top of the standard rates when you buy, and Capital Gains Tax at 18% or 24% when you sell. This 2026/27 guide walks through the SDLT surcharge, the CGT rules, the non-resident surcharge and the main planning points, with worked examples on 2026/27 figures.

Last updated: 7 June 2026Last reviewed: 7 June 2026How we verify

The 5% additional property SDLT surcharge

In England and Northern Ireland, buying an additional residential property (a second home, holiday home or buy-to-let) adds a 5% surcharge to the standard Stamp Duty Land Tax rates. The surcharge applies to the whole purchase price, band by band. The standard 2026/27 bands are:

Portion of price	Standard rate	Additional property rate
Up to 125,000 pounds	0%	5%
125,001 to 250,000 pounds	2%	7%
250,001 to 925,000 pounds	5%	10%
925,001 to 1.5 million pounds	10%	15%
Above 1.5 million pounds	12%	17%

Scotland (Land and Buildings Transaction Tax) and Wales (Land Transaction Tax) have their own separate systems and surcharges; the figures above apply to England and Northern Ireland only.

Worked example: SDLT on a 350,000 pound second home

You buy a 350,000 pound holiday home and already own your main residence. The additional property SDLT is calculated band by band:

First 125,000 pounds at 5% = 6,250 pounds
Next 125,000 pounds (125,001 to 250,000) at 7% = 8,750 pounds
Final 100,000 pounds (250,001 to 350,000) at 10% = 10,000 pounds

Total SDLT = 25,000 pounds. By comparison, the standard SDLT on the same property as a main home would be 0 plus 2,500 pounds plus 5,000 pounds = 7,500 pounds. The 5% surcharge has added 17,500 pounds to the bill.

This is why the SDLT surcharge is often the single largest upfront cost of buying a second property, and why it must be budgeted for from the outset.

The non-resident surcharge

If you are not UK resident for the purposes of the test, you pay an additional 2% surcharge on top of the standard rates and, where it applies, on top of the 5% additional property surcharge. A non-resident buying a second home in England or Northern Ireland could therefore face the standard band rate plus 5% plus 2%.

Residence for this surcharge is determined by a specific day-count test around the date of the transaction, which is different from the usual Statutory Residence Test for income tax. If you might be affected, check your position carefully before committing.

Capital Gains Tax when you sell

A second home that is not your main residence is liable to Capital Gains Tax on any increase in value when you sell. For residential property in 2026/27, the rates are 18% for gains falling within your basic rate band and 24% for gains in the higher or additional rate band. Your main home remains exempt under Private Residence Relief.

You can deduct the 3,000 pound annual exempt amount, allowable purchase and selling costs, and qualifying improvement spending before applying the rate. CGT on UK residential property must be reported and paid within 60 days of completion.

Example: a higher-rate taxpayer sells a second home for 420,000 pounds that cost 320,000 pounds, with 10,000 pounds of allowable costs. The gain is 420,000 - 320,000 - 10,000 = 90,000 pounds. After the 3,000 pound exemption, the taxable gain is 87,000 pounds. CGT at 24% = 20,880 pounds.

Electing your main residence

If you own more than one home, you can elect which counts as your main residence for Private Residence Relief. The election must be made within two years of acquiring the second property, and can be varied later. Choosing the property expected to make the larger gain as your main residence can reduce future CGT.

Without a valid election, HMRC decides your main residence based on the facts of where you genuinely live, including factors such as where your family is based, where you are registered to vote, and where you spend most of your time.

Common mistakes

Forgetting the SDLT surcharge in the budget - the 5% extra can be tens of thousands of pounds and is due within 14 days of completion.
Assuming the surcharge can be avoided - on a genuine second property it cannot; only true main-residence replacements escape it.
Missing the 60-day CGT deadline - residential property gains must be reported and paid within 60 days, not via the normal Self Assessment date.
Not making a main-residence election in time - the two-year window can be missed, removing a valuable planning option.
Overlooking the non-resident 2% surcharge - it stacks on top of the 5% and catches buyers living abroad.
Ignoring spousal transfers - using both partners exemptions and bands can materially reduce CGT.

FAQs

Frequently Asked Questions

How much extra stamp duty do you pay on a second home?

In England and Northern Ireland, buying an additional residential property (such as a second home or buy-to-let) attracts a 5% SDLT surcharge on top of the standard rates, applied to the whole purchase price. The standard rates for 2026/27 are 0% up to 125,000 pounds, 2% from 125,001 to 250,000 pounds, 5% from 250,001 to 925,000 pounds, 10% from 925,001 to 1.5 million pounds, and 12% above that. The 5% surcharge is added to each of those bands for an additional property.

Do I pay Capital Gains Tax when I sell a second home?

Yes. A second home that is not your main residence is liable to Capital Gains Tax when you sell it. For residential property the rates in 2026/27 are 18% for gains within the basic rate band and 24% for gains in the higher or additional rate band. You can deduct the 3,000 pound annual exempt amount and allowable costs first. The gain must be reported and the tax paid within 60 days of completion.

Can I avoid the second home stamp duty surcharge?

The 5% surcharge applies if you own more than one residential property at the end of the day of purchase and are not replacing your main residence. If you are genuinely replacing your only or main home (selling the old one), the surcharge does not apply. If you pay the surcharge because your old home has not sold yet, you may be able to reclaim it if you sell the previous main residence within the time limit set by HMRC. There is no general loophole to avoid it on a true second property.

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What is the non-resident stamp duty surcharge?

Non-UK residents buying residential property in England and Northern Ireland pay an additional 2% SDLT surcharge on top of the standard rates and, where applicable, on top of the 5% additional property surcharge. So a non-resident buying a second home could face standard rates plus 5% plus 2%. Residence for this purpose is defined by a specific test based on days spent in the UK around the transaction.

Which property counts as my main residence for CGT?

Your main residence qualifies for Private Residence Relief, which exempts the gain on that home from CGT. If you own more than one home you can elect which is treated as your main residence, but the election must be made within two years of acquiring the second property. Without a valid election, HMRC determines your main residence based on the facts of where you actually live.

Does the stamp duty surcharge apply to holiday homes?

Yes. A holiday home is an additional residential property, so the 5% SDLT surcharge applies in England and Northern Ireland if you already own another home. The surcharge applies regardless of how often you use the property, whether it is let out, or where in the UK it is located.

Can I reduce Capital Gains Tax on a second home?

You can reduce CGT by deducting allowable costs (purchase costs, selling costs and qualifying improvement spending), using your 3,000 pound annual exempt amount, and offsetting any capital losses. Spouses and civil partners can transfer assets between themselves with no gain and no loss, so using both partners annual exempt amounts and basic rate bands can reduce the overall bill. For significant disposals, take professional advice.

When do I have to report and pay the tax on a second home?

Stamp Duty Land Tax must be reported and paid within 14 days of completion of the purchase. When you later sell, Capital Gains Tax on UK residential property must be reported and paid within 60 days of completion using the HMRC online service. Missing either deadline can lead to penalties and interest.

Related Calculators

Stamp Duty Calculator

Includes the additional property surcharge

CGT Calculator

Tax on selling a second home

Mortgage Calculator

Repayments on the new property

Income Tax Calculator

Determines your CGT rate band

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Sources

About the author

Emma Clarke

UK Tax Writer

Emma Clarke has been writing about UK personal tax since 2018, with a particular focus on Self Assessment, PAYE coding and the practical mechanics of how HMRC actually applies the rules to ordinary salaries. Her work concentrates on translating the dense language of HMRC manuals and Finance Act schedules into worked examples that show, pound by pound, how income tax and National Insurance reduce a gross salary to the figure that lands in a UK bank account. Emma covers the full PAYE lifecycle: tax codes (1257L, BR, K codes, emergency codes), the Marriage Allowance, the High Income Child Benefit Charge, salary sacrifice arrangements and their effect on pensionable pay, the Apprenticeship Levy, and the differences between the rUK and Scottish income-tax regimes. She is particularly interested in the edge cases that catch PAYE employees out — the £100,000 personal-allowance taper, the 60% effective marginal rate it creates, and the interaction between student-loan plans and pension contributions. Every figure in Emma's articles is verified against the current HMRC rates pages and worked through a Self Assessment calculation by hand before publication. She writes to CalcHub's editorial standards: primary-source citations, plain English, no promotional language, and clear "this is general information, not financial advice" disclaimers where appropriate.

Personal-finance writer since 2018
UK tax specialism — PAYE, Self Assessment, National Insurance
Writes to CalcHub editorial standards (primary-source citation, annual review)

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Disclaimer: This guide is for general information only and does not constitute tax or financial advice. Property tax rules are complex and differ across England, Northern Ireland, Scotland and Wales. For any significant purchase or sale, consult a qualified accountant or tax adviser.