Being aware of the legal status of holiday lets is important if you are planning to purchase one or have recently purchased a holiday let of your own. It is crucial to ensure that your holiday complies with the relevant housing legislation, government directives and guidance for taxation. 

When asking if holidays are exempt from stamp duty the simple answer is no, stamp duty will have to be paid on the property, but the amount of stamp duty land tax you are legally required to pay may change depending on the circumstances of your purchase.


A Definition Of A Holiday Let

A property is considered to be a holiday let if it is a form of short-term rental accommodation where the guest pays an agreed amount of rent for access to the property for several consecutive nights or weeks. A holiday let property can be used as an alternative to a hotel and will usually have the space and facilities that are offered in traditional hotels or hostels. If the holiday let is furnished then these types of accommodation are referred to as furnished holiday lets also known as (FHLs.)

Holiday Let Stamp Duty Legislation

If you’re buying a holiday let there are some charges that you need to factor into your overall total costs and stamp duty land tax is one of those charges.

A holiday let, in most cases, will be treated as if you are buying a second property or a buy-to-let property. This means that you will be expected to pay an additional 3% of your total property costs on top of your normal stamp duty land tax rates. The additional 3% surcharge is what is known by HMRC as Higher Rates on Additional Dwellings (HRAD.)

The higher rate of stamp duty land tax only applies if your holiday let meets the following certain conditions or criteria:

Higher rates of stamp duty don’t apply to holiday lets if:

Holiday Let Stamp Duty Exemption

There are a few cases whereby your holiday let property or land may be exempt from stamp duty land tax payments. These holiday let stamp duty exemptions include:

Holiday Let Stamp Duty Refunds

The higher rates for stamp duty may be making you have doubts about purchasing a holiday let but if it is set up successfully then you will be able to earn your investment back by renting the property out to tenants over the year, You will also have a holiday home that you can use for personal use too.

However, if your holiday let is furnished then you could be able to claim a stamp duty land tax rebate. Stamp duty will still have to be paid on a furnished holiday let but there are ways to minimise the costs.

There are certain transactions that could actually qualify for a stamp duty land tax relief that reduces the amount of higher rates you will have to pay on top of your initial stamp duty land tax costs. There are some criteria you will need to meet in order to qualify for this stamp duty land tax relief, these include:

If you’re purchasing a property with plans to rent it out as a holiday let then you will likely be charged residential stamp duty land tax rates, however, if the rental period surpasses 140 days in a single year then business rates will apply and this will make your transaction commercial. So, if this is the case then you could be owed a stamp duty land tax refund.

How Can CapEx Tax Help?

If you think you are legally entitled to a stamp duty land tax refund on your holiday let or are unsure if you qualify for either a refund or exemption on your stamp duty payments then contact us today and our tax specialists can guide you through your claim process and talk you through the types of evidence you will need to support your claim.