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Change to higher rate Stamp Duty Land Tax announced in light of Covid-19

The higher rates of Stamp Duty Land Tax (SDLT), which adds a 3% surcharge to the usual rates of SDLT, will be due where an individual (either on his own, jointly or his spouse or civil partner) purchases additional residential property with a value of £40,000 or more and certain other conditions are met. There is relief from the surcharge where the new property is intended to be the replacement home, provided the existing home has been disposed of.

Where an individual has met all the conditions for the surcharge because they have not been able to dispose of their previous main residence, the higher rates will apply initially but an application can be made for a refund of the surcharge if the previous main residence is disposed of within three years.

Due to Covid-19, many house sales have been delayed.  As a result, HMRC has announced today (3 June) that a refund may still be granted if the new home was purchased on or after 1 January 2017 and the three year period has passed.  To be able to get the refund after three years has passed, the purchaser must evidence that the delay in selling their previous main residence is due to reasons outside of their control preventing the sale.

This specifically covers the impact of Covid-19, but is not limited to that and so can include, for example, action taken by a public authority preventing the sale.  Once the reason for the delay has ended, an application for a refund of the higher rates can be made once the previous main residence has been sold.

The above is intended to highlight an important concession in the rules, but the legislation on the higher rate are complex – please contact one of our SDLT advisers should you have any queries.

FEATURING: Becky Hayes
Becky advises family business, companies and individuals on a broad range of VAT and SDLT matters. Becky’s particular specialisms include land and property, company reconstructions… read more
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