If you’re considering purchasing a holiday let, it’s important to understand the additional Stamp Duty Land Tax (SDLT) costs that may apply before you buy.
Official GOV.UK info on Stamp Duty Land Tax
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Read on and we will explain more about what Holiday Let Stamp Duty is…
Huntingstile South near Grasmere Ref. 1169919
What is Stamp Duty?
Stamp Duty or Stamp Duty Land Tax (SDLT) is a cost a buyer must pay when purchasing a residential property or a piece of land in England and Northern Ireland worth more than £125,000. The charge works on a tiered basis and is only applicable after the minimum threshold price is reached. This increases in relation to the value of the property thereafter.
Rates for a single property
From 1st April 2025, Stamp Duty rates will be:
- Up to £125,000 – 0%
- £125,001-£250,000 – 2%
- £250,001-£925,000 – 5%
- £925,001-£1.5million – 10%
- Above £1.5million – 12%
So, for example:
In April 2025 you buy a house for £295,000. The SDLT you owe is calculated below:
- 0% on the first £125,000 = £0
- 2% on the second £125,000 = £2,500
- 5% on the final £45,000 = £2,250
- total SDLT = £4,750
Buying outside England or Northern Ireland?
Stamp Duty Land Tax (SDLT) applies only in England and Northern Ireland. Buyers in Scotland pay Land and Buildings Transaction Tax (LBTT), while buyers in Wales pay Land Transaction Tax (LTT).
When do you have to pay Holiday Let Stamp Duty on a second home?
Second home Stamp Duty rules are different, in most cases, holiday lets are treated as additional residential properties, meaning buyers who already own another property will usually pay the higher rates of SDLT.
If the second property is worth more than £40,000, you’ll have to pay Stamp Duty for second homes.
If you’re buying an additional residential property to the one you call home, including holiday lets, you may need to pay the higher rates of Stamp Duty. These apply:
- If the residential property you’re buying is above £40,000, and you already own a property worth £40,000 or more
- On additional properties that you part own, so long as your share is worth £40,000 or more
- If you own a property abroad and are looking to buy an additional property in the UK worth more than £40,000
- If you’re married or in a civil partnership, the rules apply as if you are buying the property together, even if you’re not. So, if your spouse has to pay the higher rates, you’ll have to pay them
The higher rates
From 31 October 2024, the surcharge increased from 3% to 5% and is applied to the relevant portions of the property’s purchase price.
Rates from 1 April 2025
- Up to £125,000 – 5%
- £125,001 – £250,000 – 7%
- £250,001 – £925,000 – 10%
- £925,000 – £1.5 million – 15%
- Above £1.5 million – 17%
So, for example, if you bought a holiday let from 1st April 2025 (when the nil-rate amount was reduced to £125,000) worth £290,000, this works out at:
£0-£125,000
- Standard rate: 0%
- Higher rate: 5%
- Total: 5% of £125,000 = £6,250
£125,001-£250,000
- Standard rate: 2%
- Higher rate: 5%
- Total: 7% of £125,000 = £8,750
Remaining £40,000 (£250,001-£290,000)
- Standard rate: 5%
- Higher rate: 5%
- Total: 10% of £40,000 = £4,000
This means that buying a £290,000 holiday let from 1st April 2025 will now cost you a total of £19,000 in Stamp Duty.
Use the SDLT calculator to give you an idea of how much tax you’ll pay. View more about the higher rates for second homes here
Am I exempt from the higher rate surcharge of Stamp Duty Land Tax?
There are some cases where you could be exempt from the higher rates of Stamp Duty as a holiday home owner. These include:
- If you buy a property with an annexe or an additional dwelling in the grounds (for example, a “granny flat”). You won’t have to pay the tax on this as a second home, so long as the main property is worth at least two thirds of the overall property price
- If you buy a plot of land without a property already on it (even if you plan to build a property on it at a later date), you won’t have to pay the higher rate
- If you buy a mixed-use property as your additional property (e.g. a restaurant, shop or office with a flat above), you will be exempt
- If you buy a property that can only be used as a holiday let (see above)
Holiday Let Use-Only Exemption: Some properties with specific planning restrictions or commercial classifications may be treated differently for SDLT purposes. HMRC treats most holiday lets as residential property for SDLT purposes, even where they are operated commercially.
Professional advice should always be sought before relying on any exemption.
If you need information about Holiday Let Tax, read our parent company Sykes Cottages blog page for helpful advice
Need help or advice with the above?
Got a tax question? Zeal have a free helpline for Sykes and sister brand owners, get in touch via Sykes@gozeal.co.uk and as a Sykes and brand owner you have the benefit of exclusive 10% discount on standard fees.
Considering buying a holiday let? Get in touch to find out more
The Lakelovers team know the area like the back of their hand. If you’re interested in a chat about how we can help, complete the form below to request contact from our team, including a copy of our FREE Owner Guide, or call our Windermere Office on 015394 88855 or email newowners@lakelovers.co.uk
Disclaimer
Tax rules may change and the information is correct at the time of publication. The information above has been provided by Zeal and is intended for general guidance only. Lakelovers does not provide tax, legal or financial advice, and nothing in this article should be interpreted as such. Tax rules and individual circumstances vary, so you should always consult the relevant legislation, HMRC guidance, and seek advice from a qualified professional before making any decisions relating to your holiday let.
While Lakelovers may introduce third-party providers such as Zeal, we make no representations or warranties regarding the accuracy, suitability, reliability or quality of any products or services they provide. Any agreement for goods or services is entered into solely between you and the third-party provider and at your own risk. Lakelovers accepts no liability for any loss, damage or decisions made in reliance on the information contained within this article or arising from any arrangement with a third-party provider.
