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Own a second home in the UK, such as a buy-to-let, holiday home or inherited property? You could pay up to four different taxes: Stamp Duty when you buy, Council Tax while you own it, Income Tax if you rent it out and Capital Gains Tax if you sell for a profit. This guide explains which ones apply to you.
| Your situation | Tax | Good to know |
| Buying a second home | Stamp Duty Land Tax (SDLT) | Includes a 5% surcharge. England and Northern Ireland only. |
| Owning a second home (not renting it out) | Council Tax | Your council can add a premium. |
| Renting out your second home | Income Tax and Council Tax | Income Tax on rental profit. Council Tax when the property is empty between lets. |
| Selling your second home | Capital Gains Tax | Only if you sell for a profit. |
You could pay up to four different taxes on a second home, depending on what you do with the property. Which ones apply to you depends on whether you’re buying, renting it out or selling.
Avoid costly mistakes and let Taxfix take care of it for you. Our UK-accredited accountants make filing quick and stress-free, starting from just £99.
As long as a property isn’t your current main residence, it’s usually treated as a second home for tax purposes. This applies regardless of what you use it for and however you came to own it. It includes:
Not every tax applies to every second home. Here’s how each one works.
When it applies
Income Tax applies when you rent out your second home. You must file a Self Assessment tax return if either of these applies:
If your gross rent is between £1,000 and £2,500, contact HMRC. If you don’t usually file a return, register for Self Assessment by 5 October after the tax year you had rental income.
What you’re taxed on
You pay Income Tax on your rental profit: your total rent minus allowable expenses. These include letting agent fees, insurance, repairs and maintenance (but not improvements), ground rent, service charges and accountants’ fees.
You can’t deduct the property’s price or the capital part of your mortgage repayments. Mortgage interest works differently (see below).
How much you pay
Your rental profit is added to your other income, such as your salary. Your total income decides which band each part of your income falls into.
| Total income (2026/27) | Tax rate | Band |
| Up to £12,570 | 0% | Personal Allowance |
| £12,571 to £50,270 | 20% | Basic rate |
| £50,271 to £125,140 | 40% | Higher rate |
| Over £125,140 | 45% | Additional rate |
These rates apply in England, Wales and Northern Ireland. Scotland has its own bands.
Example: Priya earns £40,000 from her job and £10,000 rental profit. Her total income is £50,000, which stays in the basic rate band. So her rental profit is taxed at 20%: £10,000 × 20% = £2,000.
To estimate your own bill, use our rental income tax calculator.
Mortgage interest: a 20% tax credit
You can’t deduct mortgage interest from your rent. From 2020/21, you get a 20% tax credit instead. The credit is capped at the lowest of your interest, your rental profit and your income above the Personal Allowance.
Example: £6,000 interest = £1,200 credit.
Why it matters: you only get the credit if you claim it, and you can’t also use the £1,000 property allowance.
The default is a 50/50 split for married couples and civil partners living together. Form 17 lets you split income by actual ownership shares, if you own the property as tenants in common in unequal shares. You both sign it, and HMRC must receive it within 60 days of the last signature. Joint tenants can’t use it.
Why it matters: if you own jointly with a spouse or civil partner, the split can lower your combined tax bill.
Example: the basic-rate partner owns 70% and the higher-rate partner owns 30%. On £10,000 profit, tax falls from £3,000 (50/50) to £2,600 (70/30).
Taxfix connects you with UK-qualified tax accountants and digital tools to review your options and file your return. Plans start from £99.
When you buy a home in the UK, Stamp Duty is usually the main tax you pay. You pay it once. The amount depends on the property’s price and whether you’re a first-time buyer. If you buy an additional property, you pay an extra 5% on top of these rates.
Stamp Duty Land Tax (SDLT) rates for residential property, from 1 April 2025
| Buyer type | Property value | Tax rate |
| First-time buyer | Up to £300,000 | 0% |
| £300,001 to £500,000 | 5% | |
| Standard rates (all buyers) | Up to £125,000 | 0% |
| £125,001 to £250,000 | 2% | |
| £250,001 to £925,000 | 5% | |
| £925,001 to £1.5 million | 10% | |
| Over £1.5 million | 12% |
First-time buyer rates apply to properties up to £500,000. Above that, the standard rates apply.
Council Tax is set by your local council. You usually pay it on a second home, even when nobody lives there. Councils can give a discount, or charge a premium of up to 100%, which means up to twice your normal bill. Find your local council on GOV.UK.
You only pay Capital Gains Tax (CGT) when you sell your second home at a profit. Your main home is usually exempt through Private Residence Relief, but a second home usually isn’t. You must report the sale and pay any tax within 60 days of completion.
Your profit is the sale price minus the purchase price and minus allowable costs, such as solicitor fees, estate agent fees and Stamp Duty. Improvements count, but repairs don’t.
For 2026/27, you get a £3,000 tax-free allowance, called the Annual Exempt Amount. Gains on residential property are taxed at 18% if they fall within your basic rate band, and at 24% above it.
Example: you buy a second home for £200,000 and sell it for £280,000. Your costs are £5,000, so your gain is £75,000. After the £3,000 allowance, £72,000 is taxable. As a higher-rate taxpayer, you pay 24% on that, which is £17,280.
Yes, in one main case: when you replace your main home. In England and Northern Ireland, you won’t pay the 5% Stamp Duty surcharge if you sell your previous main home within 3 years (36 months) of completing the new purchase. If you pay the surcharge upfront because you haven’t sold yet, you can claim a refund once you do.
This rule only applies when you’re replacing your main home. If you buy a second property and keep your first, the 5% surcharge still applies.
A person can only have one main residence at a time. Married couples and civil partners who live together can also only count one property as their main home between them.
For tax purposes, you can nominate which property is your main residence if you own more than one, but only one can be exempt from Capital Gains Tax at a time.
Patricia and Liam are ready to start a new chapter together! Although this is their first home together, Patricia already owns a home. As they are making a joint application, their new home will be considered a second home.
If your gross rent is more than £10,000 a year, or your profit after expenses is more than £2,500, you must file a Self Assessment tax return. If your gross rent is between £1,000 and £2,500, contact HMRC.
You’ll need to report:
File by 31 January following the end of the tax year. For example, for the 2025/26 tax year (6 April 2025 to 5 April 2026), the online deadline is 31 January 2027. The same date applies to paying any tax you owe. If you file a paper return, HMRC must receive it by 31 October 2026.
Taxfix connects you with UK-qualified accountants who can check your mortgage interest relief and Form 17 declaration, then help you file. Plans start from £99.
The main taxes on a second home are Stamp Duty Land Tax (SDLT) when you buy, Council Tax while you own it, Income Tax if you rent it out, and Capital Gains Tax if you sell for a profit. In England and Northern Ireland, SDLT includes a 5% surcharge on additional homes.
Yes. The main tax on a 2nd property you don’t rent out is Council Tax, which councils can increase with a premium. You don’t pay Income Tax on it, but Capital Gains Tax may apply if you sell it for a profit.
Only in one main case: if you’re replacing your main home and sell your previous main home within 3 years (36 months) of completing the new purchase. If you’ve already paid the surcharge, you can claim a refund once you sell. Otherwise, the surcharge applies.
Your rental profit (rent minus allowable expenses) is added to your other income and taxed at your usual Income Tax rates. Mortgage interest isn’t deducted from your rent, but you get a 20% tax credit on it instead.
You can claim the costs of running the property, such as letting agent fees, insurance, repairs and maintenance (but not improvements), ground rent, service charges and accountants’ fees. You can’t claim the property’s purchase price or the capital part of your mortgage repayments.
It’s a tax credit of 20% of the mortgage interest you pay on a residential rental property. It replaces the deduction for that interest. It’s capped at the lowest of your interest, your rental profit and your income above the Personal Allowance.
Sometimes. Married couples and civil partners living together can use Form 17 to be taxed on their actual ownership shares, if they own the property as tenants in common in unequal shares. Taxfix’s UK-qualified accountants can review whether this makes sense for your situation.
Not always. Simple rental income can often be declared using GOV.UK guidance. Taxfix connects you with UK-qualified tax accountants if you have a mortgage, joint ownership or several properties.
Or see our Guides, Calculators or Taxopedia
