Second home
A second home is a residential property you own in addition to your main residence, whether a holiday home, a city flat or a buy-to-let. Owning one brings three tax consequences: a higher rate of stamp duty on purchase, capital gains tax on sale, and, since 1 April 2025, a council tax premium of up to 100 per cent in England where the property is furnished and no one lives in it as their main home. The higher stamp duty rates are set out in HMRC's guidance on additional residential properties.
What counts as a second home
What counts as a second home depends on the tax in question, and the definitions do not match. For stamp duty, it is any residential property worth £40,000 or more that you own at the end of the day you complete, when you are not replacing your main residence. For capital gains tax, it is any residential property that is not covered by private residence relief. For council tax, it is narrower still: a dwelling that is substantially furnished but is no one's sole or main residence.
The practical effect is that a single property can be a second home for one tax and not another. A let property with tenants in residence is the tenants' main home, so it is not a second home for council tax, yet it was an additional property for stamp duty when you bought it and will be liable for capital gains tax when you sell.
Stamp duty on a second home
Buying a second home in England or Northern Ireland means paying the standard residential rate of stamp duty plus a 5 per cent surcharge on the full purchase price, for any property costing £40,000 or more. The surcharge rose from 3 per cent to 5 per cent on 31 October 2024. It applies to buy-to-let purchases as much as to holiday homes, and there is no exemption for a first-time landlord. If you buy before selling your old main residence, you pay the surcharge and can reclaim it if you sell the former home within 36 months. Scotland charges an 8 per cent Additional Dwelling Supplement and Wales a higher Land Transaction Tax. For the full bands and calculations, see the entry on stamp duty land tax.
Capital gains tax on a second home
When you sell a second home that is not covered by private residence relief, you pay capital gains tax on the gain. For the 2025 to 2026 tax year the residential rates are 18 per cent for basic-rate taxpayers and 24 per cent for higher and additional-rate taxpayers, applied to the gain above the annual exempt amount of £3,000. The gain is the sale price less the original cost and allowable expenses such as stamp duty and legal fees. The tax must be reported and paid within 60 days of completion. The detail sits in the entry on capital gains tax.
Council tax on a second home
Since 1 April 2025, councils in England can add a premium of up to 100 per cent to the standard council tax bill on a furnished property that is no one's main residence, which doubles it. Wales allows up to 300 per cent and Scotland up to 100 per cent, with its cap removed from April 2026. For landlords the point that catches people out is that a furnished property between tenancies counts as a second home from the first day it falls empty. The premium, the exceptions that protect landlords during voids and refurbishments, and the holiday-let route onto business rates are covered in full in our guide to second home council tax.
Second home or buy-to-let
The line between a second home and a buy-to-let trips up landlords more than any other point on this subject. From working with self-managing landlords, we see the confusion most often at two moments: at purchase, when a first buy-to-let attracts the higher stamp duty rate as an additional property, and again between tenancies, when the same property briefly becomes a second home for council tax. The same home can be an additional property for stamp duty, a let for income tax, and a second home for council tax during a void, all at once, which is why August records the council tax band and valuation for each property alongside its tenancy, so the position is visible in one place rather than pieced together. The distinction matters because the taxes are charged on different definitions, not on the label you give the property.
Second home and the law
The higher stamp duty rates for additional dwellings sit in the Finance Act 2003, as amended, with the 5 per cent surcharge in force from 31 October 2024. Capital gains tax on residential property sits in the Taxation of Chargeable Gains Act 1992. The council tax premium rests on the Local Government Finance Act 1992, as amended by the Levelling-up and Regeneration Act 2023, which gave English councils the power to charge it from 1 April 2025. As of 2026 these are the rules in force, but rates and thresholds change at each Budget, and council tax adoption is decided locally, so check the current position before you act.
Frequently asked questions
Is a buy-to-let a second home?
For stamp duty and capital gains, yes: a buy-to-let is an additional residential property, so it attracts the surcharge on purchase and capital gains tax on sale. For council tax it is not, because while tenants live there it is their main residence and they are liable for the bill.
Do you pay more stamp duty on a second home?
Yes. In England and Northern Ireland a second home or other additional property costing £40,000 or more attracts a 5 per cent surcharge on top of the standard stamp duty rate, in force since 31 October 2024.
Do you pay capital gains tax on a second home?
Yes, when you sell it, unless private residence relief applies. For 2025 to 2026 the residential rates are 18 per cent and 24 per cent depending on your income, charged on the gain above the £3,000 annual exempt amount.
How much is council tax on a second home?
Up to double the standard bill in England, where the council has adopted the premium, and potentially more in Wales and Scotland. A furnished property with no resident can be charged from the day it falls empty.
