Stamp Duty on Holiday Lets

What is Stamp Duty Land Tax (SDLT)?

Stamp Duty Land Tax (SDLT) is a tax paid when purchasing property or land in England and Northern Ireland. For holiday let investors, it is crucial to understand how SDLT rules apply, particularly in light of recent changes.

For full official information click the link to GOV.UK Stamp Duty Land Tax

Beacon House, Sneaton Ref. 1169487

Stamp Duty is calculated on a tiered basis – you are taxed on the part of the property purchase price that falls into each Stamp Duty threshold. The current Stamp Duty Land Tax rates are:

Higher Stamp Duty Land Tax on Second Homes

Purchasing a holiday let falls under the criteria for the higher rates of SDLT, previously, the higher rate of Stamp Duty was set at 3%, but it has increased to 5% as of October 31, 2024. So, if you’re looking to purchase an additional residential property, such as a holiday let, be aware that higher rates of Stamp Duty Land Tax (SDLT) may apply. Here’s what you need to know:

• The higher rates kick in if the property you’re buying is valued at £40,000 or more and you already own another property valued at £40,000 or more.
• These rates also apply to any additional properties you partially own, provided your share is worth £40,000 or more.
• If you own a property overseas and wish to buy an additional property in the UK priced above £40,000, the higher rates will also apply to you.
• If you and your spouse are married or in a civil partnership, the rules will consider you as joint buyers, even if only one of you is purchasing the property. Therefore, if one of you is subject to higher rates, both will need to pay them.

You won’t have to pay higher rates if:

• The property costs less than £40,000.
• The property is movable, such as a caravan, houseboat, or mobile home.
• There are legal restrictions on using the property as a residence (e.g., planning permissions allowing only holiday accommodation). Note that residential rates of SDLT would apply in this case, although this exemption doesn’t apply to properties in Wales.

Read our Stamp Duty Blog by our parent company Sykes Cottages for more detailed information

Got a tax question? We have teamed up with tax experts Zeal to help all our owners save on Tax! So if you are a Sykes or brand owner, get in touch for free advice on 01633 499771 or via email Sykesfamily@gozeal.co.uk and as an owner you also have the benefit of exclusive 10% discount on standard fees.

How to pay Stamp Duty Land Tax

You have 30 days from your completion date to pay any Stamp Duty Land Tax that you owe, and to file a return to HMRC.

Usually, your solicitor will help with this. They will usually calculate the amount, collect it from you and pay it on the day of your completion, as well as submitting your return.

Potential Reliefs and Exemptions

While SDLT can be a significant cost, there are scenarios where you might be eligible for relief or exemptions:

• Multiple Dwellings Relief: If you buy multiple properties in a single transaction, you might qualify for this relief, which can reduce the amount of SDLT payable .
• First-Time Buyers Relief: If you’re a first-time buyer, you may be eligible for relief on properties up to £500,000

Tips for Buyers

• Budget early: Include SDLT in your financial planning.
• Check residency rules: Overseas buyers face an extra 2%.
• Seek professional advice: A tax advisor or solicitor can ensure full compliance and explore potential reliefs.

Understanding Stamp Duty Land Tax is essential for anyone looking to purchase a cottage in Yorkshire. By being aware of the rates, potential reliefs, and planning accordingly, you can make informed decisions and manage your finances effectively.

Need advice on Furnished Holiday Let Tax Guide read our blog for helpful information

If you are unsure of anything or just need advice or assistance, contact Zeal Tax on their free helpline 01633 499771 or by emailing sykesfamily@gozeal.co.uk. The team will be more than happy to help.

Expert holiday letting advice in Yorkshire

At Yorkshire Coastal 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.

Contact the local team on 01947 820949 or drop us an email on info@yorkshirecoastalcottages.com and we’ll get right back to you. Or you can request your FREE owner pack which will provide you with more information and guide you in the right direction.

Disclaimer

Yorkshire Coastal Cottages and Sykes can’t advise you on, and isn’t responsible for, tax matters in relation to your holiday let and the above should not be taken as such, rather as a prompt of the issues involved for further consideration. As always, please read the relevant laws, regulations and guidance and seek advice from external experts where you require it. Yorkshire Coastal Cottages and Sykes hopes that by pointing you in the direction of an expert in the field, it’s starting you off on the right foot, and you can read into this matter further and seek your own advice from Zeal, or your chosen advisor, as and when you feel it’s needed. We cannot make any representations or warranties of any kind as to the competency, qualification, fitness for purpose, accuracy, reliability, suitability, or availability of Zeal’s offers, products or services. If you choose to enter into any arrangement for the supply of goods or services of a supplier listed in this newsletter or links, you do so entirely at your own risk. Any such arrangement is between you and the supplier. We are not a party to it. We shall not be liable for any loss or damage arising under or in connection with any such arrangement or any action or decisions you take or do not take as a result of reading the above or any loss suffered as a result.