A Guide to Stamp Duty on Second Homes in Wimbledon

If you buy a second home, you will be liable for a 3% stamp duty surcharge. The government introduced the charge in 2016 to cool down the buy-to-let property market. However, you can reclaim stamp duty on second homes if you sell your original property within three years.

Stamp duty for second homes in London

Having helped many customers in the South West London areas of Wimbledon, Wimbledon Village, Coombe, New Malden and Kingston deal with the issues around stamp duty on UK second homes, here are some of the most common questions we are asked about this government tax.

What Is Stamp Duty?

The full name given to Stamp Duty when you buy a property in England and Northern Ireland is Stamp Duty Land Tax (SDLT). This tax has slightly different names, depending on where you live. In Scotland, it is called Land and Buildings Transaction Tax (LBTT) and in Wales, Land Transaction Tax (LTT).

Stamp Duty Land Tax applies when you purchase a property over a specific price threshold. The tax rates are graded in bands, so your total amount will depend on the property purchase price. If you are buying a second home, be it for buy-to-let or your second home, you’ll have to pay an extra 3% in Stamp Duty on top of the normal stamp duty rate for each band. This government tax applies to freehold properties (houses, flats, land and other buildings) with or without a mortgage and leasehold properties.

As a first-time buyer, you will benefit from stamp duty tax relief if your buying property costs £625,000 or less. For more information, read our blog on Stamp Duty For First-Time Buyers.

How Much Stamp Duty Will I Pay On A Second Home?

From April 2016, second-home and buy-to-let buyers in England and Wales must pay a surcharge of 3% on each band. The stamp duty rates changed in the mini-budget announced in September 2022. See the table below for the current stamp duty rates:

Property Value  Standard Stamp Duty Rate  Second Home Stamp Duty Rate  
£0-£250,000  0%  3%  
£250,001 – £925,000  5%  8%  
£925,001 – £1.5m  10%  13%  
£1.5m+  12%  15%  

Stamp duty is payable on the portion of the purchase price that falls into each band.

For example, if you’re buying a second home worth £700,000 you would pay:

  • 3% on the proportion of its value up to £250,000, then
  • 8% stamp duty on the proportion from £250,000 to £700,000

Your total stamp duty bill would be £61,500 for a second home – compared to £33,750 if it were your main home.

Stamp Duty Calculators

For an up-to-date estimate of how much SDLT you may be liable to pay on your residential property purchase in England, there are many online calculators where you can input a few details, including the type of property purchase and the purchase value. You can use the gov.uk website’s calculator or an alternative.

Guide on stamp duty

What counts as a second home?

If you already own a residence, any additional property you buy to live in or rent out is a second home. That includes holiday homes, houses given to you by your family, and property abroad.

Stamp duty on second homes for non-UK residents.

As an overseas resident, you must pay a 2% surcharge on any property purchase. If you are an overseas resident buying a second home, you will pay this surcharge on top of the second home stamp duty rates. This additional stamp duty charge applies if you purchase a second home with a UK resident.

Are Any Properties Excluded From The Stamp Duty For Second Homes?

Homes costing less than £40,000 are exempt from stamp duty. Caravans, mobile homes and houseboats are also exempt, whatever their value.

What If I Plan To Live In The Property I’m Buying?

Say you’re looking to move but struggling to find a buyer and can afford to buy your dream property before you sell. You could end up owning two homes even though you plan to make the new home your primary residence. Whatever the reason, you will need to pay the extra tax if you buy a second home. But if you sell your original home within three years, you can reclaim the additional stamp duty on second homes.

What If I Own Property Abroad?

You must pay the additional 3% stamp duty surcharge if you buy a second home, even if your first property is overseas.

Can I Avoid Stamp Duty On A Second Home By Putting One Property In My Spouse’s Name?

If you are married or in a civil partnership, you are counted as one unit by HMRC. So even if you do not personally own one of the properties, you must pay the charge. This does not apply if you live with your partner but are unmarried.

second homes in London

If I Divorce And Buy A Home To Live In, Do I Have To Pay The Second Home Charge?

If a property adjustment order has been made to hand the home over to your spouse as part of your divorce settlement, you won’t need to pay the charge.

Otherwise, you will be liable for the second home surcharge. However, you can claim back stamp duty on a second home if you sell your share of the property within three years.

I’ve Inherited Property Do I Have To Pay The Additional Rate?

If you inherit a property and then go on to buy another home, you will need to pay a higher rate. However, if you inherit a share in a property of 50% or less and buy another property within three years, you won’t need to pay the extra stamp duty tax.

What If I’m Buying A Property For My Children?

If your name is on the deeds of the property, then you will pay the second home surcharge. If, however, you are helping your child to buy, either by giving them the deposit as a gift, acting as a guarantor for their loan or putting savings into a family offset mortgage, you won’t be liable for the charge – as long as the home will be in your child’s name and they don’t already own property.

What If I’m Buying With Someone Who Already Owns Property?

If you are married or in a civil partnership, and one of you already owns a property, you must pay the stamp duty rates for second homes if you buy an additional property. If you are not married, and the other property is purchased solely in the name of the non-property owner, you will pay stamp duty at the standard rates.

Does The Additional Rate Apply To Leasehold Extensions?

Yes. All extensions to the lease are subject to stamp duty. The threshold at which you start to pay is £40,000.

Can I Claim Back Stamp Duty On A Second Home?

If you sell your first property within three years (more in some exceptional circumstances) of buying a second home, you can claim back the additional 3% stamp duty from HMRC. Visit the gov.uk website to apply for your refund online.

You will need this information to apply for your refund:

  • your Government Gateway user ID
  • address and details of the additional property that attracted the surcharge
  • its purchase date and SDLT transaction reference number
  • exact amount of stamp duty you paid when you bought it
  • details and address of the main residence you have now sold
  • date you sold your previous residence
  • name of the buyer who purchased it from you
  • how much tax you want to reclaim
  • name of the person who will receive the stamp duty refund payment
  • bank sort code and account details for the refund

Find Out More

If you want to buy property in Wimbledon, we can advise you on the many complex issues involved. Contact us to find out more about our selection of properties.

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Nicolas Holmes

Nick joined Robert Holmes to inject fresh ideas and help grow the New Homes department of Robert Holmes as well as helping to inject technology into the business and to grow its client base. Together with one of the Directors Nick is in charge of all Development opportunities that Robert Holmes deals with along with sales. Aged 40, he provides succession together with the two existing directors. Nick has always been focused on building client relationships and sales. He built up his own gallery in Chelsea, where he had a loyal following of customers and artists.

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