A UK second-home buyer in 2026/27 pays: 5% additional-rate SDLT surcharge on top of standard bands (so £15,000 SDLT on a £250k second home); up to 100% council tax premium in many councils (often 200% from April 2026); full CGT on disposal at 18%/24% — no Principal Private Residence relief on a second home; and no income tax relief on mortgage interest for a personal-use property. The previous Furnished Holiday Let regime that gave Business Asset Disposal Relief and full mortgage interest deduction was abolished in April 2025.
Stamp duty on a second home — the maths
The additional-rate SDLT surcharge applies to any residential property purchase where you own more than one residential property worldwide at the end of completion day. It was 3% from April 2016, rose to 5% in October 2024, and remains at 5% for 2026/27.
| Purchase price | Standard SDLT | + 5% surcharge | Total SDLT |
|---|---|---|---|
| £200,000 | £1,500 | £10,000 | £11,500 |
| £350,000 | £7,500 | £17,500 | £25,000 |
| £500,000 | £15,000 | £25,000 | £40,000 |
| £750,000 | £27,500 | £37,500 | £65,000 |
| £1,000,000 | £41,250 | £50,000 | £91,250 |
Council tax — the second-home premium
Until April 2025, local councils could charge up to a 100% premium on long-term empty properties only. From April 2025, the Levelling-up and Regeneration Act 2023 allows councils to charge 100% premium on second homes too — and from April 2026, the cap rises to 200% in some areas (so a Band D council tax of £2,000 becomes £6,000 on a second home).
| Council area | 2026/27 second-home premium (typical) |
|---|---|
| Cornwall, Devon, Cumbria, Welsh coastal | 100% (some moving to 200%) |
| North Yorkshire, Norfolk, Suffolk coastal | 100% |
| London boroughs | Many implementing 100% |
| Lake District / Peak District / Scottish Highlands | 100% (Scotland uses similar mechanism) |
The premium is on top of normal council tax. A £2,500/year Band E in a 100%-premium area becomes £5,000/year on a second home. Over a 20-year hold, that's an extra £50,000 of council tax cost.
Capital Gains Tax on sale
When you sell a second home, full CGT applies on any gain above the £3,000 annual exempt amount. Principal Private Residence (PPR) relief only protects your main home — second homes don't qualify unless you genuinely live in them as your only or main residence for part of the ownership period.
Gain = £120,000 minus £4,000 selling costs = £116,000
Less £3,000 AEA = £113,000 taxable
At 24% = £27,120 CGT (reported within 60 days via UK Property Disposal return)
The FHL regime — abolished April 2025
The Furnished Holiday Let regime previously gave second-home owners who rented out as holiday lets significant tax advantages: full mortgage interest deduction, Business Asset Disposal Relief on sale (10% CGT up to £1m lifetime), capital allowances, and pension-relevant earnings. FHL was abolished in April 2025.
Existing FHL properties from before April 2025 transitioned to normal property letting rules. Mortgage interest is now restricted to 20% basic-rate tax credit (Section 24). CGT on disposal moves from 10% BADR to 18%/24% standard CGT rates. Capital allowances are no longer available.
The transition has been disruptive — many holiday-let portfolios are no longer commercially viable as a higher-rate-payer investment. Some owners have moved to limited company structures; others have sold.
The four decisions worth making for a second home
- Time the purchase across two tax years if possible. SDLT is a one-off; council tax timing matters less. But the CGT planning starts on day one: keep records of every renovation cost (deductible against future gain), and consider whether the property is suitable for the PPR election strategy.
- Check council tax premium in the specific area. Many UK buyers don't research the local council's second-home policy. A property in a 100%-premium area costs significantly more annually than the same property in a neighbouring council without the premium.
- Decide letting strategy before purchase. Pure personal use, occasional holiday let, or full BTL all have different tax footprints. Mixing personal use with letting under the post-FHL rules has complex apportionment rules — and full BTL with the 5% surcharge gives at least some commercial rationality.
- Plan ownership structure for couples. Joint ownership splits the £3,000 AEA across two people (£6,000 total) on eventual sale, and splits any rental income. Sole ownership in the lower-earning spouse's name reduces income tax on letting.
Common second-home mistakes
- Forgetting the 60-day UK Property CGT return. When you sell, the gain must be reported and CGT paid within 60 days of completion — not waited for Self Assessment. Penalty regime is automatic.
- Not making the PPR election within 2 years. If you own two homes used as residences (e.g. work flat + family home), the election deadline is 2 years from when you started using the second one. Missing the deadline locks in HMRC's default (which is usually the property where you actually live more, but not guaranteed).
- Treating mortgage interest as deductible against rental income post-2020. Section 24 restricts this to a 20% basic-rate tax credit. For higher-rate landlords, leveraged BTL is much less efficient than it was pre-2020.
- Underestimating ongoing costs. Empty properties still require insurance (often more expensive than occupied), maintenance, council tax (with premium), and management. Annual holding costs of 2-3% of property value are typical.
Sources and methodology
SDLT additional-rate surcharge from gov.uk SDLT rates. Council tax premium powers from the Levelling-up and Regeneration Act 2023 (Section 79). FHL abolition from gov.uk FHL abolition guidance. PPR election rules from HS283 PPR helpsheet.
UK Tax Drag is educational and not regulated financial advice — see the disclaimer for the full position.
Other roles in this library
- Buy-to-let landlord 2026/27
- Crypto investor 2026/27
- Higher-rate saver with £100k+ savings
- Pre-retiree: annuity vs drawdown
- £45k middle manager
- £150k+ City professional
- Second-property buyer
- Director-shareholder of a Ltd Co
- Inheritance windfall recipient
- Early retiree / FIRE
- All money guides by role →
How UK Tax Drag holds itself to account
Every page is reviewed against the editorial standards, written from primary sources, sourced openly, and corrected publicly. No affiliate revenue. No sponsored content. No paid placements.