If you’re planning to buy a second property, whether that’s a buy-to-let, a holiday home or an additional property to add to a larger portfolio, you’ll know that Stamp Duty Land Tax (SDLT) is a significant part of the cost.

While SDLT is a given when buying a residential property, recent changes to SDLT mean second homes are now taxed more heavily and differently, so the money you’ve put away to cover the bill might not cut it anymore.

With a new PM who has new views on SDLT and a seeming preference for Land Value Tax – an annual levy based solely on the value of the land itself, excluding any buildings or improvements on the property – things could change, but in this piece, we’re focusing on the current state of SDLT.

I’ll walk you through what current rules on SDLT mean for second homes, how it could impact you and how you can prepare and manage your portfolio, whether that portfolio consists of one holiday home or a suite of buy-to-let properties.

What is Stamp Duty Land Tax?

SDLT is a tax applied to all homes above a certain value that has to be paid by the buyer within 14 days of completion.

The amount you pay varies based on the property value, but the first £125,000 of a property’s value is tax free for everyone. This marks another change, as up until April 2025 the nil-rate threshold was double that at £250,000.

Here’s how the bands break down:

Property or lease premium or transfer value	SDLT rate
Up to £125,000	Zero
The next £125,000 (the portion from £125,001 to £250,000)	2%
The next £675,000 (the portion from £250,001 to £925,000)	5%
The next £575,000 (the portion from £925,001 to £1.5 million)	10%
The remaining amount (the portion above £1.5 million)	12%

There are also some exceptions – for example, first-time buyers don’t pay SDLT on properties under £300,000.

What is the SDLT surcharge, and how has it changed?

If the property you’re buying isn’t your only property, a surcharge is added on top of the standard rates above. That surcharge now stands at 5%, up from 3% in October 2024.

This is applied to the full value of the property in one go, rather than being broken down into bands like the standard SDLT.

Why the surcharge hits harder than people expect

Standard SDLT is tiered, a bit like income tax, so you only pay the higher rate on the portion of the price above each threshold, not on the whole amount. The surcharge doesn’t work this way – it applies to the entire purchase price, with no tax-free portion and no tapering.

Most buyers are used to banded income tax or familiar with paying standard SDLT when they move house. They don’t expect tax relative to the full purchase amount.

Another challenging factor is the way in which the money needs to be paid. It’s due upfront, within 14 days of completion. It can’t be paid in instalments, and it can’t be offset against rental income for tax purposes.

The combination of no banding and quick turnaround can leave buyers who aren’t prepared caught short.

An example

Here’s what SDLT looks like in practice, for a £500,000 second home bought today:

• 0% on the first £125,000 = £0
• 2% on the next £125,000 (£125,001–£250,000) = £2,500
• 5% on the remaining £250,000 (£250,001–£500,000) = £12,500
• Standard SDLT total: £15,000

Then add the surcharge:

• 5% applied to the full £500,000 = £25,000
• Total SDLT payable: £40,000

A note on “Mansion Tax”

You may also have seen headlines about a new “Mansion Tax”. While it’s separate from SDLT, it’s worth knowing about, particularly if you have multiple high-value properties in your portfolio.

The High Value Council Tax Surcharge applies from April 2028 to individual properties worth £2 million or more, based on 2026 valuations. It’s charged annually, in bands from £2,500 up to £7,500, on top of standard council tax. Crucially, it falls on the owner, not the occupier, so for a buy-to-let, that’s you, not your tenant.

Consultation on the topic closed mid-July, so the details may still change, but if you hold a portfolio, it’s one to watch.

Will SDLT change after the Autumn Budget?

Andy Burnham has already ruled out reforming SDLT or council tax in this year’s Budget, but he’s been clear that the current property tax system isn’t fixed for good.

So, while we’re not expecting changes to happen overnight, the direction of travel appears to be shifting.

It’s long been reported that the PM would prefer a land value tax (LVT). This would be a fundamental structural change, not a quick tweak.

As an LVT has already been ruled out for this Budget specifically, the Treasury has a narrower set of choices:

1. Hold the current rates, let the 5% surcharge and £125,000 threshold bed in, having only just changed
2. Refine who the rate targets by increasing surcharges on corporate or non-resident buyers rather than typical Buy-To-Let landlords
3. Signal a longer-term shift. Don’t make any big changes now but start laying groundwork for a move from one-off transaction taxes towards recurring property charges, without committing to it yet.

What these changes mean for you

If you’ve got a deal in progress, you should aim to exchange and complete before Budget Day to lock in today’s rates and give yourself certainty on your transaction cost.

If you’re buying a second home to enjoy now, or a single buy-to-let to build a nest egg for retirement in the not too distant future, the tax bill will be a bigger share of your upfront cost than it was two years ago, but it’s unlikely to change any time soon.

If you’re growing a wider portfolio, SDLT and the Mansion Tax both need managing carefully. As it stands, your SDLT bill will scale significantly with each acquisition, so it’s worth balancing expansion against returns before you commit. This matters even more at the higher end of the market, where the Mansion Tax adds a second layer with a recurring annual charge from 2028, on top of council tax, insurance and maintenance.

And while nothing is set to change just yet, with the PM’s preference for LVT, it’s worth long-term property investors beginning to factor a potential annual holding tax into their yield forecasts now.

Whether you’re looking for a holiday home, retirement nest egg or building a thriving property portfolio, the best way to avoid a surprise is the same: get accurate figures early, before you commit to a purchase.

To talk through what this means for your purchase or portfolio, contact David Herd, via david.herd@championgroup.co.uk or call our team on 0161 703 2500.

On October 5, 2026   /   Business Advisory