Wondering how to avoid stamp duty on a second home? If you’re a property investor, landlord, or buying a holiday home, you’ve likely come across Stamp Duty Land Tax (SDLT) — and more specifically, the 3% surcharge that applies to additional properties.
This extra cost can take a significant bite out of your investment budget, so it’s no surprise that many buyers are looking for ways to reduce or eliminate it.
In this guide, we’ll cover everything you need to know about avoiding or reducing stamp duty legally — especially for second homes and buy-to-let properties — and what options exist to structure your investment more efficiently.
What Counts as a Second Home?
HMRC defines a second home as any additional residential property you own in addition to your main residence, even if it’s:
A buy-to-let property
A holiday home
Purchased by a limited company you own
If it’s residential and not your only home, the 3% stamp duty surcharge applies — on top of the standard SDLT rates.
What Is the Stamp Duty Rate on a Second Home?
As of 2025, here’s how stamp duty is calculated on second homes in England:
| Property Price | Standard Rate | Second Home Rate (Includes +3%) |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001–£925,000 | 5% | 8% |
| £925,001–£1.5 million | 10% | 13% |
| Over £1.5 million | 12% | 15% |
So, if you’re buying a £200,000 buy-to-let property, your SDLT bill would be £6,000 (3% of the total price).
How to Avoid Stamp Duty on a Second Home — Legally
While completely avoiding stamp duty on a second home is rare, there are legal exemptions, refunds, and strategies that may apply in specific scenarios:
1. Sell Your Main Residence Within 3 Years
If you buy a new home (that becomes your main residence) before selling your current one, you’ll be charged the 3% second home surcharge upfront.
But — if you sell your original home within 36 months, you can claim a full refund.
✅ How to do it:
Sell your old main residence within 3 years
Apply to HMRC within 12 months of that sale
This is a common strategy for upsizing homeowners and portfolio investors alike.
2. Buy a Mixed-Use Property
Buying a mixed-use or commercial/residential property (e.g. a shop with a flat above) does not attract the 3% surcharge, as it’s classed as non-residential.
This can be a creative strategy for investors looking to diversify while reducing SDLT.
3. Purchase Through a Limited Company (with Long-Term Strategy)
While companies do still pay the 3% surcharge, buying through a limited company may offer:
Corporation tax benefits
More flexible ownership structures
Potential IHT planning advantages
This won’t avoid stamp duty entirely, but can reduce your total tax burden across your portfolio.
4. Transfer Between Spouses
Transferring property ownership between married couples or civil partners is exempt from SDLT — even if there’s a mortgage involved.
If structured properly, this can help balance portfolios and reduce long-term liabilities — though it won’t help with an outright second home purchase.
5. Leverage First-Time Buyer Relief (in Rare Cases)
If your spouse or partner is a genuine first-time buyer and purchasing solo, they may qualify for first-time buyer SDLT relief.
However, if you’re married and already own property, this generally won’t apply unless you’re legally separated or buying independently.
Can You Add Stamp Duty to a Mortgage?
This is another frequent investor question. The answer is:
No — not directly.
Most lenders don’t allow you to include stamp duty in your mortgage, and expect it to be paid upfront at completion. However, some investors structure their finances to borrow slightly more (if LTV permits) or use business capital to cover it.
Do You Pay Stamp Duty When You Sell a House?
No — this is a common misconception.
Stamp duty is only paid by the buyer, not the seller. When you sell a property, you don’t pay SDLT — although Capital Gains Tax (CGT) may apply if it’s an investment property.
How Lifestyle Property Group Helps You Invest Smartly
At Lifestyle Property Group, we help busy professionals, expats, and landlords invest in high-yield UK property with confidence — and that includes planning for stamp duty and other taxes.
We:
Help you assess your SDLT obligations upfront
Connect you with tax-efficient mortgage and legal partners, such as VPC Accountants
Source high-performing properties in affordable, low-stamp-duty brackets
Offer a fully managed, hands-free investment service
Whether you’re building a portfolio or buying your next investment property, we’ll help you do it strategically — and compliantly.
Conclusion
So, how do you avoid stamp duty on a second home?
In short, while the surcharge is hard to escape, there are smart, legal ways to reduce or reclaim it — especially if you’re planning to:
Sell your main residence within 36 months
Buy a mixed-use or commercial property
Structure your purchase via a limited company
With the right advice and strategy, stamp duty doesn’t have to be a deal-breaker.
👉 Book Free Consultation and speak to our team today.
