Buying a second home or establishing a holiday letting business in Wales is a major investment opportunity, but it requires careful financial planning. The most significant initial cost to budget for is the Land Transaction Tax (LTT), which is the Welsh equivalent of Stamp Duty.
Whether you’re purchasing for personal use or as a holiday letting business, knowing how LTT applies in Wales will help you budget and plan with confidence. If you already own a holiday let, or are considering buying a second property in Wales, this guide takes you through everything you need to know about LTT on second homes — including current rates, exemptions, and how changes affect holiday lets.
Keep reading to learn all about stamp duty on second homes in Wales and how it could impact your next property purchase…
What is Stamp Duty (Land Transaction Tax)?
Stamp Duty Land Tax (SDLT) no longer applies in Wales — instead, property purchases are subject to Land Transaction Tax (LTT).
LTT is a progressive tax in Wales, with rates varying by property price and purpose.
As of 11 December 2024, the Welsh Government increased the higher residential LTT rates (for additional properties such as second homes and holiday lets).
If you’re buying a second home or additional property in Wales, typically the higher residential LTT regime applies rather than the “main” residential rates.
Sources: Welsh Government: Land Transaction Tax rates and bands
How Does Land Transaction Tax (LTT) Apply to Second Homes?
LTT is the tax due on property purchases in Wales.
When buying a second home or buy-to-let / holiday let, the higher residential rates apply.
Your solicitor or conveyancer must ensure LTT is paid (or a return filed) within 30 days of the completion. Failing to do so may result in penalties or interest.
Current Land Transaction Tax Rates for Second Homes in Wales (Updated for 2025/26)
As of 11 December 2024, the Welsh Government introduced new higher LTT rates for additional residential properties, including second homes and buy-to-let investments. These progressive rates are built into the rate bands themselves.
LTT Higher Residential Rates (Effective 11 December 2024)
| Property Price Band |
LTT Rate for Second Homes |
| Up to £180,000 |
5% |
| £180,001–£250,000 |
8.5% |
| £250,001–£400,000 |
10% |
| £400,001–£750,000 |
12.5% |
| £750,001–£1.5 million |
15% |
| Over £1.5 million |
17% |
These rates apply to purchases where the buyer already owns another residential property and is not replacing their main residence.
Step-by-Step Guide to Calculating Your LTT for a Second Home
-
Divide the property price into the bands listed above.
-
Multiply each portion by the corresponding higher residential rate.
-
Sum each portion’s tax to get the total LTT payable.
Example: Buying a second home in Wales for £260,000
-
Up to £180,000 at 5% → £9,000
-
£80,000 (from £180,001 to £260,000) at 8.5% → £6,800
Total LTT = £15,800
(If part of the price falls into the 10% band, treat accordingly.)
Note: If contracts were exchanged before 11 December 2024, transitional rules may apply that use the older higher residential rates.
This amount is payable to the Welsh Revenue Authority upon completion of the property purchase. It’s important to budget for this upfront cost when planning your second home investment.
💡 Tip: You can use the Welsh Revenue Authority’s LTT calculator to estimate the tax due on your second home purchase.
Who Has to Pay the Higher Rates of Stamp Duty (Land Transaction Tax)?
You’ll likely pay higher residential LTT if:
- The property costs £40,000 or more, and you already own another property worth £40,000 or more.
- You part-own another property with value ≥ £40,000.
- You own a property abroad and are buying an additional one in Wales.
- You’re married or in a civil partnership; both parties’ holdings are considered.
- You buy with someone who owns another property — if any party is liable, the whole transaction is taxed under the higher regime.
Are There Any Exemptions to Paying the Higher Rates?
Exemptions and exceptions include:
Replacing Your Main Residence:
If you sell your current main home and buy a new one, you may qualify for standard LTT rates instead of higher rates. If you keep your existing home, higher rates apply.
Property Price Under £40,000:
If the additional property costs less than £40,000, LTT does not apply.
Types of Property Exempt from LTT:
Caravans, houseboats, and mobile homes are generally exempt.
Joint Purchases:
If buying with someone who already owns a property, the higher rates apply to the full purchase price.
Refunds:
If you paid higher rates because you hadn’t yet sold your main home, selling it within 3 years may make you eligible for a refund.
Company or Investment Purchases:
Different rules may apply; always seek specialist advice.
👉 For more information head to: Welsh Government – Higher rates for additional dwellings.
Need Help?
For personalised guidance on exemptions, refunds, or complex cases, we recommend speaking to a qualified financial advisor. Our trusted partners at Zeal Tax are experts in this area and happy to help. You can reach them at:
📞 01633 499771 | 📧 sykes@gozeal.co.uk
Can I Offset the Cost of Stamp Duty?
Although LTT cannot be directly offset, there are ways to manage overall costs of buying and running a holiday let in Wales.
From April 2025, the Furnished Holiday Let (FHL) regime was abolished, meaning:
- Capital allowances on furniture and fixtures will no longer apply as before.
- Mortgage interest relief will be limited, similar to standard residential lets.
- Certain Capital Gains Tax reliefs, like Business Asset Disposal Relief, will no longer apply.
You can still deduct general allowable expenses from rental income (maintenance, services, etc.), and use smart structuring (individual vs company) to optimise tax.
What This Means for Holiday Let Owners
Even without FHL tax advantages, you can still:
- Structure ownership effectively (individual vs company).
- Claim allowable expenses against rental income.
- Review mortgages and financial products for tax efficiency.
Please consult a property tax specialist to understand your personal situation.
Speak to a Specialist
Tax rules can change quickly, and the impact of this reform will vary depending on your situation. For the most accurate advice, we recommend speaking with a qualified property tax specialist.
Read more about these changes in our Furnished Holiday Lettings Tax Guide, updated for 2025.
Recent Changes and Trends in Stamp Duty in Wales
In December 2024, the Welsh Government raised higher residential LTT rates by 1 percentage point across all bands for additional properties.
In the first quarter of 2025, LTT receipts rose by 22 %, partly due to these increased rates.
While LTT is static, many Welsh councils are imposing council tax premiums on second homes. Councils may charge up to 300 % extra above standard council tax rates.
For more details on the latest rules, see our guide: Navigating the New Holiday Let Rules in Wales.
Business Rates vs. Council Tax: What Holiday Let Owners in Wales Need to Know
To mitigate these rising council tax premiums, many owners of self-catering properties aim to classify their property as a commercial business and pay Non-Domestic Rates (Business Rates) instead of Council Tax.
To qualify for business rates in Wales:
- Available to let at least 252 days per year
- Actually let for at least 182 days per year
If your property does not meet both criteria, it remains liable for council tax, including any second-home premium.
Steps to register:
- Keep accurate records of bookings and availability.
- Contact the Valuation Office Agency (VOA) or Welsh Revenue Authority for assessment.
- If approved, the property moves to the non-domestic rating list.
- Small Business Rates Relief may apply depending on rateable value.
Not Sure What’s Right for You?
The choice between council tax and business rates depends on how frequently your property is let. Business rates often offer better value, but check eligibility carefully.
Considerations for Second Home Buyers in Wales
Thinking of buying a second home or holiday let in Wales? Here are some key things to consider before you commit:
-
Understand your LTT liability — using the higher residential rates, not a surcharge.
-
Get professional advice — only a specialist can navigate exemptions, refunds, company structuring.
-
Meet letting criteria — especially if you want to switch from council tax to business rates.
-
Monitor policy changes — FHL abolition, council tax premium updates, LTT rate shifts.
-
Check local council practice — not every council charges the maximum premium, so check your area.
For more details on what to consider before heading into the holiday let business, head to Our Beginners Guide to Holiday Letting in North Wales.
Need help or have a question?
Purchasing a second home in Wales — whether for personal use, rental income, or as a long-term investment — can be incredibly rewarding. But it’s important to go in with a full picture of the costs and responsibilities involved.
From understanding stamp duty on second homes in Wales to navigating council tax premiums and business rates, the more informed you are, the more confident your decisions will be.
We’re always here to support you on your holiday letting journey.
Buying a second home in Wales is a significant financial decision that requires careful consideration of all associated costs, including the Land Transaction Tax. By understanding the LTT rates and planning accordingly, you can make an informed decision and maximise the benefits of owning a second property in this beautiful part of the UK. For more insights and expert advice on purchasing holiday lets in North Wales, explore the Menai Holidays Blog or get in touch with our team today.
Additional resources:
Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc). in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area this is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
As a holiday letting owner you are responsible for compliance with health & safety laws, regulations and guidance, and for having suitable insurances in place (not Sykes Holiday Cottages or its brands). From time to time, Sykes shares information with you on the topic of health and safety and insurance. When it does so, it is not providing you with advice (legal, financial, tax or otherwise); please seek your own as you see fit. In addition, it is not making any representations or warranties about the information being complete or free from errors or inaccuracies. Sykes shall not be liable for any loss or damage arising under or in connection with your reliance on it.
