Stamp Duty Land Tax: Refunds of higher rates for additional dwellings

When a person buys a property they will pay Stamp Duty Land Tax based on the value of the property. If they purchase a property which is a dwelling, and they already hold at least one other dwelling at that time, they pay a higher rate of Stamp Duty Land Tax which is 3% above the normal residential property rates.

Where the second dwelling is to replace the person’s main home, and the previous main home is sold within three years of buying the new home, the additional 3% surcharge can be reclaimed from HMRC.

The legislation surrounding the right to claim a repayment has recently been updated to allow a claim outside of the three year period in exceptional circumstances. In order to qualify for a refund the following conditions must be met:

1. The new main residence was purchased on or after 1 January 2017;
2. The taxpayer was prevented from selling their main residence before the expiry of the three-year time limit due to exceptional circumstances beyond their control;
3. They sold the previous main residence as soon as they reasonably could after ceasing to be so prevented.

HMRC has confirmed that exceptional circumstances may include the impact of COVID-19 and so if your property disposal has been delayed due to the restrictions imposed by COVID-19 you may still be able to claim a refund.

There is no pre-transaction clearance facility for this and each case will be considered on its own merits. Some examples can be found in the HMRC guidance here.

If you would like further information or need assistance to claim a refund then please get in touch.