Stamp Duty on a Holiday Let: Rates, the 5% Surcharge and What You Pay

How much stamp duty do you pay on a holiday let?

You pay the standard residential rates plus a 5% surcharge on top. On a £300,000 holiday cottage that is £20,000 if you already own a home, and £5,000 if you do not. Almost every holiday let buyer already owns somewhere, so the £20,000 figure is the one to budget for.

Here are the rates in force for 2026/27 in England and Northern Ireland. The middle column is what you pay if this is the only property you own. The right-hand column is what you pay when you own another one.

Portion of the price	Standard rate	Rate with the 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%

Three things about that right-hand column catch buyers out.

• The surcharge is 5%, not 3%. It went up for purchases completing on or after 31 October 2024. If a spreadsheet, a broker or an older article is telling you 3%, it is out of date and it will understate your bill by 2% of the whole price.
• It applies to the entire price, not the top slice. That is why the surcharge on a £400,000 purchase is a flat £20,000. The bands still work as slices, but the extra 5 percentage points sit on every slice.
• Owning one other property anywhere in the world is enough. The test is whether you, or a spouse or civil partner you live with, hold another dwelling worth £40,000 or more at the point you complete. A flat in Spain counts. So does a share in a property you inherited.

The nil-rate band went back to £125,000 on 1 April 2025, so the temporary £250,000 starting threshold that ran from 23 September 2022 is gone. If you are not UK resident for stamp duty purposes, add a further 2% to every band on top of everything above.

Why a holiday let is residential property for stamp duty

Because the tax looks at the building, not at your booking calendar. There is no separate rate card here and there never has been: stamp duty for holiday lets is the ordinary residential stamp duty everyone else pays, with the additional-property surcharge on top. What the tax does care about is which of two camps your purchase falls into, because the camp decides both the rate scale and whether the surcharge can reach you.

Classification	What it covers	Surcharge?
Residential	Any building used or suitable for use as a single dwelling: houses, flats, cottages, lodges, including ones let short-term to holidaymakers	5% surcharge applies if you already own another dwelling
Non-residential or mixed-use	Genuine trading premises such as 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 surcharge, and lower rates apply to the whole price

This is where older advice on holiday lets tends to overpromise. A three-bedroom cottage in Cornwall, a lakeside lodge or a city-centre apartment on a short-let platform is a self-contained dwelling. Letting it to a rolling series of weekend guests does not make it commercial property, because the test in section 116 FA 2003 is whether the building is used or suitable for use as a dwelling, not how often the occupiers change. If you could live in it as a home, it is residential, and the surcharge follows.

Genuine non-residential treatment is narrow. You get it for a real hotel or 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 do try to argue mixed-use to escape the surcharge, and HMRC scrutinises those claims hard. Do not buy on the assumption that your holiday let is commercial, because it almost never is.

Worked example: stamp duty on 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 cottage near Padstow to let to holidaymakers. She is not replacing a main home, so the surcharge applies.

Treated as residential (the usual outcome)

The cottage is a self-contained dwelling, so residential rates apply and the surcharge lands 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: £30,000

Without the surcharge the same purchase would cost £10,000, so the surcharge itself is £20,000, exactly 5% of the price.

If it were genuinely non-residential or mixed-use

If Sarah were instead 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 at all.

• 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: £9,500

The £20,500 gap between the two is real, and so is the risk of claiming the wrong one. For a standard cottage the answer is £30,000. Treat the second calculation as background, not as a route to aim for: HMRC will challenge a non-residential claim on a building that is plainly a dwelling, and a return that turns out to be wrong carries interest and penalties on top of the tax.

Can you avoid the 5% surcharge on a holiday let?

Rarely, and only in a handful of genuine situations. Most of what gets marketed as a way around it is not one.

• It is the only property you own. If you hold no other residential interest and you live in the property, standard rates apply with no surcharge. That is unusual for a holiday let, because the point is normally to let it.
• You are replacing your main home. If you pay the surcharge because your old home has not sold yet, you can reclaim it when you sell that home within 36 months of completing on the new one. Again, this only helps where the let is genuinely replacing where you live.
• The property is genuinely non-residential or mixed-use. A real guest house, a hotel, or a dwelling with a substantial commercial element attracts non-residential rates. The bar is high and the facts have to carry it.
• You are buying six or more dwellings in one transaction. Section 116(7) FA 2003 automatically treats six or more separate dwellings bought in a single deal as non-residential, so no surcharge applies. It is a statutory deeming rather than an election you claim, and it is the route that works for a genuine bulk purchase such as a block of holiday apartments.

Two routes you may still see suggested are 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 bill. And buying through a limited company does not remove the surcharge: a company counts as already owning property, so it pays the surcharge from its first purchase, and a single dwelling over £500,000 can fall into the 17% flat rate under Schedule 4A FA 2003 unless relief is claimed. Incorporating can still make sense for the income tax position, which is a separate question we cover in our buy-to-let limited company guide, but it is not a stamp duty saving.

If you want the detail on when a property genuinely qualifies for mixed-use treatment, see our note on SDLT mixed-use classification, and for portfolio purchases the six-dwellings non-residential rule. If you have already paid a surcharge you think was refundable, the 5% surcharge refund process sets out the claim.

Holiday home stamp duty in Scotland and Wales

Stamp duty land tax only covers England and Northern Ireland. If your holiday let is in Scotland or Wales, a different tax applies and the numbers above do not.

Where the property is	Purchase tax	Additional-property charge
England and Northern Ireland	Stamp Duty Land Tax (HMRC)	5% surcharge on top of the standard bands, from 31 October 2024
Scotland	Land and Buildings Transaction Tax (Revenue Scotland)	Additional Dwelling Supplement at 8% of the full price, from 5 December 2024
Wales	Land Transaction Tax (Welsh Revenue Authority)	A separate higher-rate band structure, not a flat surcharge

This matters because some of the strongest holiday let markets sit outside England. A cottage on the Isle of Skye is a Scottish purchase, and 8% on the whole price is the heaviest additional-property charge anywhere in the UK. A lodge in Snowdonia or a townhouse on the Gower is a Welsh purchase, where the nil-rate band starts at £225,000 rather than £125,000 and the higher rates are built into their own table rather than stacked on top.

Two more differences are worth knowing before you assume the English rules travel. Both Scotland and Wales kept multiple dwellings relief when England abolished it in June 2024, so a multi-unit purchase can still be worth modelling there. And Welsh councils can charge council tax premiums of up to 300% on second homes and holiday lets in some areas, which is an annual cost that has nothing to do with the tax on the purchase. Confirm the jurisdiction before you budget anything.

Is stamp duty being abolished?

No. Stamp duty land tax has not been abolished, and no legislation abolishing it has been passed. If you are buying this year, you pay it.

The reason people ask is that the abolition of stamp duty is a live topic in public debate. Proposals to scrap it, or to replace it with an annual tax on property value, circulate in think tank reports and get regular press coverage. Some of them are detailed and some are serious. None of them is law, none has a commencement date, and there is nothing you can plan a purchase around. Anyone giving you a date for when stamp duty will be abolished is guessing.

Here is what is actually enacted and in force for 2026/27, which is the set of rules your purchase will be taxed under:

• The nil-rate band is £125,000, back to that level since 1 April 2025.
• The surcharge on additional dwellings is 5%, up from 3% for purchases completing on or after 31 October 2024.
• First-time buyer relief gives 0% up to £300,000 and 5% from £300,000 to £500,000, and it disappears entirely above £500,000. It will not help you on a holiday let unless that is the only property you own.
• Non-UK-resident buyers pay a further 2% on top of the rates above.
• Multiple dwellings relief is gone for England and Northern Ireland from 1 June 2024, though it survives in Scotland and Wales.

If any of that changes, it will change through a Finance Act with a commencement date, and you will have notice. Until then, plan on the numbers in the table at the top of this page.

What changed in April 2025 for holiday let taxes

Nothing about your stamp duty, and quite a lot about everything after it. The furnished holiday lettings regime was abolished on 6 April 2025. It was always an income tax and capital gains tax regime, and it never governed stamp duty, so no stamp duty relief was withdrawn and no new charge appeared. A cottage that was residential for stamp duty in March 2025 is still residential now.

What did change is how your rental profit and your eventual sale are taxed. From 6 April 2025 a former furnished holiday let is taxed as part of an ordinary UK property business, which means four things for you.

• Section 24 now applies to your mortgage. Finance costs are no longer a deductible expense. You get relief as a basic-rate tax credit instead, worth 20% for 2026/27. If you are a higher-rate taxpayer, this is the change you will feel most. Our guide to the Section 24 mortgage interest restriction walks through the mechanics.
• Capital allowances on furniture stopped. You can no longer claim plant and machinery allowances on the fit-out. Replacement of domestic items relief applies instead, and it only covers like-for-like replacements, never the initial furnishing. Allowances already pooled from before the abolition keep receiving writing-down allowances.
• Business Asset Disposal Relief no longer applies. A holiday let sale qualified for it up to 5 April 2025 and does not now.
• Losses carry forward. Losses from the old furnished holiday let business are carried forward into the ongoing property business and set against its future profits, so they are not lost. They stay within that property business, so they cannot be set against other income.

One administrative point that catches couples: while the property was a furnished holiday let you could split the income in whatever proportion reflected the real position. Now the standard 50/50 default for jointly held property applies, and changing it needs a formal election. For a fuller view of the income side, see how much tax you pay on a holiday let and our explainer on serviced accommodation tax after the April 2025 changes.

Capital gains tax when you sell a holiday let

You pay 18% on gains falling in your basic-rate band and 24% above it, after the £3,000 annual exempt amount for 2026/27. A former holiday let is a standard residential property for capital gains tax now, with no rollover relief and no Business Asset Disposal Relief.

Reporting is tight. If tax is due, you file a UK property return and pay within 60 days of completion. If the gain is fully covered by main residence relief, losses or the annual exemption, a UK resident does not need that 60-day filing. Non-UK residents file within 60 days on every UK land disposal, whether or not any tax is payable.

If you held the property as a furnished holiday let for years, the loss of Business Asset Disposal Relief is the biggest sting on exit. A gain once taxed at 10% is now taxed at up to 24%, and even for businesses that still qualify for the relief the rate has since risen to 18% from 6 April 2026. That changes the arithmetic on whether to sell, gift or hold, so model it before you commit. Our complete guide to capital gains tax on property covers the reliefs that do still apply.

April 2027 property income rates and your holiday let

From 6 April 2027 your rental profit is taxed at 22% basic, 42% higher and 47% additional, separately from your other income. These are enacted rates, not a proposal: Finance Act 2026 received Royal Assent on 18 March 2026. They apply to property income in England, Wales and Northern Ireland. Only Scotland is carved out for 2027/28, where Holyrood sets its own rates.

The Section 24 credit rises in step, from 20% to 22%, so no new basic-rate gap opens up for a mortgaged owner. The practical effect on a holiday let is two percentage points more tax on the rental profit from 2027/28. That is modest per pound and meaningful across a portfolio, and it is a good reason to review structure and finance before April 2027 rather than after. Our note on the 2027 rates and Section 24 relief works through the numbers.

Making Tax Digital for holiday let landlords

You are in Making Tax Digital from 6 April 2026 if your qualifying gross income tops £50,000. That means digital records and quarterly updates to HMRC rather than one annual return. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028.

Two details decide whether you are caught. The test is on gross income, not profit, so a holiday let turning over £55,000 with £40,000 of costs is still in. And it adds up your property and self-employment income together, so a smaller holiday let alongside other letting or trading income can push you over the line on its own. If you own the property jointly, you test your share rather than the whole. Our MTD for landlords guide sets out the timeline and the record-keeping rules.

What to check before you buy a holiday let

1. Confirm the classification. Assume residential for any normal cottage, flat or lodge. Only treat it as non-residential or mixed-use if the facts genuinely support that, and take advice before you file on that basis.
2. Check which country it is in. England and Northern Ireland use stamp duty land tax, Scotland uses LBTT with an 8% supplement, Wales uses LTT. The numbers differ materially and the reliefs differ too.
3. Budget the full surcharge. On a £400,000 residential holiday let where you already own property, that is £30,000, calculated across the whole price and payable within 14 days of completion.
4. Model the income and the exit, not just the purchase. Section 24, the loss of Business Asset Disposal Relief and the April 2027 rates all belong in the calculation before you decide whether to hold personally or through a company.
5. Set up for Making Tax Digital. If your gross property and trading income tops £50,000, get digital records running now rather than at the first quarterly deadline.

The short version: a holiday let is residential property for stamp duty, the 5% surcharge almost always applies, nothing about that changed in 2025, and nothing about it is being abolished. The real planning work sits on the income and exit side. If you want a second opinion on the stamp duty treatment of a specific purchase, or on whether a structure makes sense for your portfolio, our team works with holiday let and serviced accommodation owners across the UK.