Does stamp duty still apply to a furnished holiday let after April 2025?
Yes. Buying a furnished holiday let in England or Northern Ireland still triggers stamp duty land tax, and for the great majority of holiday cottages and apartments the 5% additional dwellings surcharge applies on top of the standard rates.
The confusion is understandable. The Furnished Holiday Lettings regime was abolished on 6 April 2025, and a lot of buyers assume that abolishing the regime changed everything about how a holiday let is taxed. It did not change the stamp duty. FHL status was always an income tax and capital gains tax label. It governed whether the property qualified for capital allowances, Business Asset Disposal Relief and certain pension and loss reliefs. It never governed SDLT, which is charged by reference to the physical character of the building at the point you complete, not the tax regime that applies to the rental profits afterwards.
So the honest answer to the underlying question is that nothing about the SDLT on your purchase changed on 6 April 2025. A holiday cottage that was residential for SDLT in March 2025 is still residential in 2026. What changed is everything after the purchase: the income is now taxed as an ordinary property business, the gain on sale is taxed under the standard residential CGT rates, and Section 24 bites on the mortgage interest. We cover that below, because it is the part that genuinely caught FHL owners out.
Why most holiday lets are residential for SDLT
SDLT splits every purchase into one of two camps, and the camp decides both the rate scale and whether the surcharge can apply.
| SDLT classification | What it covers | Surcharge? |
|---|---|---|
| Residential | Any building used or suitable for use as a single dwelling: houses, flats, cottages, lodges, including those let short-term as holiday accommodation | 5% additional dwellings surcharge applies if you already own another residential interest |
| Non-residential or mixed-use | Genuine trading premises (a working hotel or guest house), property not suitable as a single dwelling, or a dwelling sold with a real commercial or agricultural element | No additional dwellings surcharge; non-residential rates apply to the whole price |
This is where the older advice on this topic tends to overpromise. A standard three-bedroom cottage in Cornwall, a lakeside lodge, or a city-centre apartment let on Airbnb is a self-contained dwelling. HMRC looks at the bricks and mortar, not the booking calendar. Letting a normal house to a rolling series of weekend guests does not turn it into commercial property for SDLT, and tribunal decisions have been consistent on this point. If you can live in it as a home, it is residential, and the surcharge follows.
Genuine non-residential treatment is narrow. It is available for a true hotel or a guest house run as a trade with shared facilities, for a building that is not suitable for use as a single dwelling, or for a mixed-use purchase such as a flat above a working shop. Buyers occasionally try to argue mixed-use to escape the surcharge, and HMRC scrutinises those claims hard. Do not buy on the assumption that a holiday let is commercial: it almost never is.
Current SDLT rates on a residential holiday let (2026/27)
The nil-rate band reverted on 1 April 2025, so the temporary £250,000 starting threshold that ran during the post-pandemic period no longer applies. The table below shows the rates in force for 2026/27, both with and without the 5% additional dwellings surcharge.
| Portion of price | Standard rate | Rate with 5% surcharge |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001 to £250,000 | 2% | 7% |
| £250,001 to £925,000 | 5% | 10% |
| £925,001 to £1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
The additional dwellings surcharge rose from 3% to 5% for transactions completing on or after 31 October 2024, under the Autumn Budget 2024 changes (Finance Act 2025). Anyone still working off a 3% figure is using a stale number. The surcharge applies to the whole price within each band, not just the slice above £250,000, which is the most common arithmetic mistake we see on holiday let purchases.
A non-natural person, such as a company, buying a single dwelling for more than £500,000 can fall into the 17% flat rate under Schedule 4A FA 2003 instead, unless a relief applies. For a genuine property rental business the relief usually keeps you out of the 17% charge, but it is worth confirming before exchange.
Worked example: a £400,000 holiday cottage in Cornwall
Take a realistic case. Sarah owns a buy-to-let flat in Manchester and buys a £400,000 holiday cottage near Padstow to let to holidaymakers. She already owns another residential property, so she is not replacing a main home and the surcharge applies.
Treated as residential (the usual outcome)
The cottage is a self-contained dwelling, so it is residential and the surcharge applies on every band.
- 5% on the first £125,000 = £6,250
- 7% on £125,001 to £250,000 = £8,750
- 10% on £250,001 to £400,000 = £15,000
- Total SDLT: £30,000
If it were genuinely non-residential or mixed-use
If, instead, Sarah were buying a true guest house run as a trade, or a property with a substantial commercial element, non-residential rates would apply and there would be no surcharge.
- 0% on the first £150,000 = £0
- 2% on £150,001 to £250,000 = £2,000
- 5% on £250,001 to £400,000 = £7,500
- Total SDLT: £9,500
The £20,500 difference is real, but so is the risk of getting the classification wrong. For a standard cottage the residential figure of £30,000 is the answer. The non-residential scenario is shown for completeness, not as a planning route to reach for: HMRC will challenge a non-residential claim on a building that is plainly a dwelling, and an incorrect return carries interest and penalties.
Can you actually avoid the 5% surcharge?
There are only a handful of genuine ways the surcharge does not bite on a holiday let, and most marketed "schemes" are not among them.
- It is your only residential property. If you own no other residential interest and the holiday let is the property you live in, standard rates apply with no surcharge. This is rare for a holiday let, because the whole point is usually to let it.
- Replacement of a main residence. If you pay the surcharge because you have not yet sold your previous home, you can reclaim it on selling that home within 36 months. Again, this only helps where the let is genuinely replacing your main residence.
- Genuine non-residential or mixed-use. A real guest house, hotel, or a dwelling with a substantial commercial element can attract non-residential rates. The bar is high and the facts must support it.
- Six or more dwellings in one deal. Where six or more separate dwellings are bought in a single transaction, section 116(7) FA 2003 automatically treats them as non-residential. This is the route for genuine bulk acquisitions, for example buying a block of holiday apartments together, and it is a statutory deeming rather than a claim you elect.
Two routes that used to be suggested are now dead ends. Multiple Dwellings Relief was abolished for transactions completing on or after 1 June 2024, so you can no longer average the price across several units to soften the SDLT. And buying through a limited company does not avoid the surcharge: a company is treated as already owning property, so the surcharge applies from the first purchase, and the 17% flat rate can bite above £500,000. Incorporation can still make sense for the income tax position, which is a different question covered in our buy-to-let limited company guide, but it is not an SDLT-saving move.
For the detail on when a property genuinely qualifies for mixed-use or non-residential treatment, see our note on SDLT mixed-use classification, and for portfolio purchases the six-dwellings non-residential rule.
Stamp duty on a holiday let in Scotland and Wales
SDLT only covers England and Northern Ireland. If your holiday let is in Scotland or Wales, the purchase tax and the surcharge equivalent are different, and the numbers above do not apply.
| Jurisdiction | Purchase tax | Additional-property surcharge |
|---|---|---|
| England and Northern Ireland | Stamp Duty Land Tax (HMRC) | 5% additional dwellings surcharge (from 31 October 2024) |
| Scotland | Land and Buildings Transaction Tax (Revenue Scotland) | Additional Dwelling Supplement (ADS): 8% on the full price (from 5 December 2024) |
| Wales | Land Transaction Tax (Welsh Revenue Authority) | Higher rates for additional residential properties (WRA bands) |
This matters because some of the most popular holiday let markets sit outside England. A cottage on the Isle of Skye is an LBTT purchase with 8% ADS, which is a heavier surcharge than the 5% in England. A lodge in Snowdonia or a townhouse on the Gower is an LTT purchase. Welsh councils can also charge council tax premiums of up to 300% on second homes and holiday lets in some areas, which is an ongoing annual cost separate from the purchase tax. Always confirm the jurisdiction before you budget the acquisition cost.
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What changed for FHL income and gains in 2025
The abolition left SDLT alone but reshaped the day-to-day tax on a holiday let. From 6 April 2025 a former FHL is taxed as part of an ordinary UK property business, which means:
- Section 24 now applies. Mortgage and finance costs are no longer a deductible expense; relief is given as a 20% basic-rate tax credit. Higher-rate owners feel this most. That credit rises to 22% from 6 April 2027 in step with the new basic rate (see the April 2027 section below). Our guide to the Section 24 mortgage interest restriction walks through the mechanics.
- Capital allowances on furniture stop. You can no longer claim plant and machinery allowances on the furniture and fittings. Instead, replacement of domestic items relief applies, which only covers like-for-like replacements, not the initial fit-out. Pooled allowances already brought forward from FHL ownership keep receiving writing-down allowances.
- Business Asset Disposal Relief is gone. A holiday let sale no longer qualifies for the 10% BADR rate that was available until 5 April 2025. The gain is taxed under the standard residential CGT rates.
- Losses carry forward. Losses from the former FHL business are ring-fenced and carried forward against future profits of the ongoing residential property business.
For a fuller view of the income tax position, see how much tax you pay on a holiday let and our wider explainer on serviced accommodation tax after the FHL abolition.
Capital gains tax when you sell a former holiday let
On a disposal, a former FHL is now a standard residential property for CGT. The rates are 18% for gains falling within your basic-rate band and 24% above it, after deducting the £3,000 annual exempt amount for 2026/27. There is no FHL rollover relief and no BADR. Non-UK resident owners report and pay through the non-resident CGT regime within 60 days of completion, and UK residents have the same 60-day reporting and payment deadline for a residential property gain.
If you owned the property as an FHL for years, the loss of BADR is the single biggest sting on exit. A gain that would once have been taxed at 10% under BADR is now taxed at up to 24%. That changes the maths on whether to sell, gift to family, or hold, and it is worth modelling before you commit. Our complete guide to CGT on property covers the reliefs that do still apply.
April 2027 property income rates and what they mean for holiday lets
From 6 April 2027 property income is taxed at separate, higher rates than other income: 22% basic, 42% higher and 47% additional. These rates are enacted law (Finance Act 2026, Royal Assent 18 March 2026, sections 6 and 7) and apply to property income in England, Wales and Northern Ireland. Only Scotland is carved out for 2027/28, where Holyrood sets the rates.
The Section 24 finance-cost credit rises in step from 20% to 22%, so a mortgaged landlord does not face a new basic-rate wedge: the credit tracks the new basic rate. The practical effect for a holiday let owner is a two-percentage-point increase across the board on the rental profit from 2027/28. It is modest per pound but compounds across a portfolio, and it strengthens the case for reviewing structure and finance well before April 2027.
Making Tax Digital for holiday let landlords
Making Tax Digital for Income Tax is live. From 6 April 2026, landlords whose qualifying gross income exceeds £50,000 must keep digital records and submit quarterly updates to HMRC, with the threshold dropping to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. Former FHL income counts as ordinary property income towards that gross-income test. If your holiday let turnover, combined with any other self-employment or property income, crosses £50,000, you are in MTD from April 2026. Our MTD for landlords guide sets out the timeline and the record-keeping rules.
Practical steps before you buy a holiday let
- Confirm the SDLT class. Assume residential for any normal cottage, flat or lodge. Only treat it as non-residential or mixed-use if the facts genuinely support it, and take advice before relying on that.
- Check the jurisdiction. England and Northern Ireland use SDLT, Scotland uses LBTT with 8% ADS, Wales uses LTT. The numbers differ materially.
- Budget the full surcharge. For a £400,000 residential holiday let where you already own property, that is £30,000 of SDLT, calculated across the whole price.
- Model the income and exit position. Factor in Section 24, the loss of BADR on sale, and the April 2027 rate increase before you decide whether to hold personally or incorporate.
- Plan for MTD. If your gross property and trading income tops £50,000, set up digital record-keeping ahead of the April 2026 start.
The headline to hold on to is simple. The FHL abolition did not remove stamp duty from holiday lets and it did not open a new way to avoid the surcharge. For most buyers the property is residential, the 5% surcharge applies, and the real planning work is on the income and exit side. If you want a second opinion on the SDLT treatment of a specific purchase, or on whether a property structure makes sense for your portfolio, our team works with holiday let and serviced accommodation owners across the UK.