June 11th, 2020 / Insight posted in Articles

Stamp Duty Land Tax refunds

As a general rule, the rates of SDLT that apply where an individual buys an additional home are 3% higher than the standard rates. There is an exception to this which applies where the additional home is bought to replace the individual’s previous main residence. Where the new home is bought before the former home has been sold, the 3% higher rates will apply to the purchase, but as long as the former home is sold within 3 years the extra SDLT paid can be reclaimed.

Due to lockdown restrictions in place over recent months, many individuals have faced difficulties in selling properties. Some of these will have failed to sell former homes within the 3-year time limit for recovering extra SDLT paid on the purchase of their new homes.

“These homeowners have now been given a lifeline by HMRC,” says Andrew Constable, a tax Partner at Moore Kingston Smith. “HMRC has confirmed that the 3-year period for selling a former home can be extended where owners were unable to sell the property due to the COVID lockdown. But they must still make the sale as soon as practical. Those who postpone a sale of the property to avoid making a loss during a downturn in the market will not be entitled to an extension to the 3-year time limit.”