Holiday Let Stamp Duty Guide

Navigating the world of Stamp Duty can feel confusing, especially when purchasing a holiday let. That’s why we’ve created this easy-to-follow guide, designed to help you understand exactly what Stamp Duty Land Tax (SDLT) is, when the higher rates apply, and how much you might need to budget for.

Whether you’re buying a second home, looking to claim a refund, or exploring potential tax reliefs, this blog will walk you through each step. Plus, we’ll share expert tips on how to offset costs and maximise the return on your investment, especially relevant for holiday lets in beautiful South Devon.

Holiday Let Stamp Duty Guide

Warren Cottage, Dartmouth

Use the quick links below to find out about a particular topic, or continue reading our holiday let Stamp Duty Guide.

• What is Stamp Duty?
• Stamp Duty Land Tax rates for residential properties
• Higher rates of Stamp Duty Land Tax (SDLT) explained
• When do the higher rates of Stamp Duty apply?
• How much is holiday let Stamp Duty?
• When the higher rate Stamp Duty no longer applies
• Do I qualify for a higher rate Stamp Duty refund?
• Potential relief from higher rate SDLT
• How to offset the cost of holiday let Stamp Duty
• Expert holiday letting advice in South Devon

What is Stamp Duty?

Stamp Duty or Stamp Duty Land Tax (SDLT) is a cost a buyer often has to pay when purchasing a residential property or piece of land in England and Northern Ireland.

The charge works on a tiered basis and is only applicable after the minimum threshold price is reached. The percentage that you owe then increases in relation to the value of the property thereafter.

There is an exception for first time buyers, who only have to pay Stamp Duty on properties worth over £300,000.

On the other hand, there is an additional charge for those buying an additional property without replacing their current one, meaning they will own more than one property. This is currently an extra 5% on top of the current rates.

Stamp Duty Land Tax rates for residential properties

Information sourced from HMRC website

The rules and regulations are updated periodically, so it is advisable to make sure you are aware of the impact it will have on your purchase price. Find out further information from HMRC on Stamp Duty.

Click below to calculate your Stamp Duty Land Tax (SDLT):

Stamp Duty Calculator

Higher rates of Stamp Duty Land Tax (SDLT) explained

Fairhaven, Dartmouth

If you’re buying a property in addition to your main residence that is not replacing it, be it a second home, a furnished holiday let or a buy-to-let, you will have to pay the higher Stamp Duty Land Tax rates.

When do the higher rates of Stamp Duty apply?

You will be required to pay the higher rate of Stamp Duty if the following applies to your situation:

• The additional property you are purchasing is worth £40,000 or over, and any property you own is also worth £40,000 or more.
• You have not sold or gifted your previous main residence.
• If you are in a civil partnership or marriage, the regulation on higher rates of SDLT apply to both as if you were buying the property together. If either of the individuals have to pay the higher rates, the other must pay the same.

In simple terms, the higher rates simply add on an extra 5% to the standard Stamp Duty rates. These higher rates start at 5% and then rises in bands, climbing to 17% for the most expensive properties.

Information sourced from HMRC website

How much is holiday let Stamp Duty?

Higher Collaton Cottage, Malborough

Here is an example of how to work out Stamp Duty on your holiday let:

If you purchase a house that is in addition to your main residence for £300,000, the higher rates SDLT you owe on the purchase will be calculated as follows:

• 5% on the first £125,000 = £6,250
• 7% on the next £125,000 = £8,750
• 10% on the final £50,000 = £5,000
• Total SDLT = £20,000

Click below to calculate your higher rate Stamp Duty

Holiday let Stamp Duty Calculator

Visit HRMC’s guidance on higher rates of Stamp Duty Land Tax for more information on the topic.

When the higher rate Stamp Duty no longer applies

There are occasions where the higher rate Stamp Duty no longer apply. These include:

• When the new property purchased is used as the buyer’s main home.
• The owner/s sell or gift their existing main home owned before the new property was purchased.
• If the property is worth less than £40,000.
• If the property is ‘moveable’. This includes caravans, houseboats or mobile homes (as long as it doesn’t become a permanent fixture).

Do I qualify for a higher rate Stamp Duty refund?

Meadow Lodge at Seawardstone, Blackawton

If you sell your previous main residence within 3 years you may be eligible for a refund of Stamp Duty higher rate charge. You must apply for any repayment within 12 months of selling your previous main residence.

You can apply for a repayment of the higher rates of SDLT as long as you are the main buyer of the property or the agent acting for them.

If you’d like to apply for a Stamp Duty refund, use HMRC’s online form.

Potential relief from higher rate SDLT

There are certain transactions that may qualify for a ‘relief’ that reduces the amount of higher rate SDLT you have to pay. These often come with specific conditions and criteria that need to be met in order to qualify. These include the following:

• If you are purchasing more than one dwelling in a single transaction (e.g., a property with a separate annex), you might be able to claim multiple dwellings relief, which could reduce the overall SDLT liability, for example, multiple dwellings relief.
• If you are purchasing a property with both residential and non-residential elements, such as a property with a shop or office space, you might be able to claim relief from the higher rates on the non-residential portion.

It’s important to carefully review the official guidance from HM Revenue & Customs (HMRC) or consult with a tax professional to determine your eligibility for any of these reliefs and to understand how they might apply in your situation. Read the HMRC’s guidance on Stamp duty land tax relief for more detailed information.

How to offset the costs of holiday let Stamp Duty

The Dairy, Malborough

There are a few favourable tax benefits which cold help offset the cost of higher rates on holiday let Stamp Duty.

Rental income

Short-term holiday lets tend to yield higher profits compared to other property rentals. The weekly rate charged for holiday lets are significantly higher, which increases your income potential and can help offset the additional cost over time.

Tax deductible ‘allowable expenses’

There are certain allowable expenses and running costs which are associated with running a holiday let business. Like with other rental businesses, some of these can be deducted from your pre-tax income, providing an additional way to recuperate the higher rate of holiday let Stamp Duty. Read our blog which covers the costs of running a holiday let in detail.

Changes to holiday let tax benefits

There used to be additional tax advantages to running a holiday let, included in the now-abolished Furnished Holiday Let tax regime. Although this regime came to an end in April 2025, owners of holiday lets which previously qualified can still claim certain tax relief for the last financial year. There are also other tax relief schemes which still apply.

Read our blog on changes to the Furnished Holiday Let scheme for details on what’s changed, and which tax benefits you can still take advantage of.

Expert holiday letting advice in South Devon

At Coast & Country Cottages, we pride ourselves on the outstanding local service we offer, delivering exceptional results with high levels of booking and income for our owners. We can provide support and advice on every aspect of making your investment a success, from planning and development to income forecasts and interior design.

Request your FREE Owners Guide

We’ve put together a selection of blogs to help answer your queries and take the hassle out of holiday letting:

Electric charging point installation for holiday lets

Holiday let rules and regulations

Where to buy a second home in South Devon

If you would like to find out more about letting your holiday home, call our experienced team on 01548 843773 (option 2) or visit our Let Your Cottage page to request a free Owners Guide today.

Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.

As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.