What are the tax implications of selling a second property in the UK (SDLT and CGT)?

Selling a residential property in the UK that is not your main home (a second home or buy-to-let property) triggers two main taxes: Stamp Duty Land Tax (SDLT) upon purchase, and Capital Gains Tax (CGT) upon sale.

### 1. Stamp Duty Land Tax (SDLT) on Purchase

When you buy a second home or buy-to-let property, you must pay an additional 3% surcharge on top of the standard SDLT rates. This surcharge applies to all bands of the purchase price, meaning the minimum rate paid is 3% (for properties under USD 250,000).

SDLT Surcharge:

• Standard SDLT rates apply first.
• An additional 3% is added to each band.

For example, the standard 5% band becomes 8%, and the 12% band becomes 15% for higher-value second homes.

### 2. Capital Gains Tax (CGT) on Sale

When you sell the second property, any profit (gain) made since acquisition is subject to CGT. For residential property, the rates are:

• Basic Rate Taxpayers: 18%
• Higher/Additional Rate Taxpayers: 24% (Note: The rates for residential property gains were reduced from 28% and 24% respectively in the Autumn Statement 2023, applying from 6 April 2024).

Calculating the Gain: The gain is calculated by taking the Sale Price minus the Acquisition Cost (plus certain allowable costs like legal fees, agent fees, and capital improvements).

Key Differences from Principal Private Residence (PPR) Relief:

• No PPR Relief: You cannot claim PPR relief on a second property, meaning the entire period of ownership (minus any allowable costs) is potentially chargeable to CGT.
• Lettings Relief: Lettings Relief, which previously reduced CGT liability for periods the property was rented out, was largely restricted in April 2020 and is now only available if the owner was in shared occupancy with the tenant during the letting period.

Reporting Requirement: If the sale results in a capital gain above the annual CGT exemption (USD 3,000 for 2024/25), you must report the disposal and pay any estimated tax due to HMRC within 60 days of completion using the online Capital Gains Tax on UK property account service, even if you already complete a Self-Assessment return.

Note on SDLT Refunds: If the property you bought as a 'second home' later becomes your main residence within 36 months of purchase, you may be able to claim a refund of the 3% SDLT surcharge.