Possible Reclaim of 3% SDLT Surcharge Beyond 3 Year Time Limit
Where an individual buys a property suitable for use as a dwelling (e.g. a residential property) and they already own another dwelling worth at least £40,000, then a 3% SDLT surcharge may become payable. This surcharge is known as the Higher Rates on Additional Dwellings (‘HRAD’). In some circumstances the individual may become eligible for a refund of the surcharge if:
- the new property is purchased as a replacement for the individual’s main home; and
- their former main home is sold within three years of the purchase of the new home.
Earlier this month HMRC confirmed that the refund will also be available to individuals who sell their former main home outside of the three-year time limit, provided that they were unable to sell the property within three years as a result of exceptional circumstances. The individual must sell the property as soon as possible after the occurrence of the exceptional circumstances and the three-year time limit must have ended on or after 1 January 2020.
Exceptional circumstances are defined by HMRC as circumstances outside of the individual’s control. This may include a delay in the sale of a property as a result of the coronavirus pandemic; for example, prospective buyers withdrawing from a sale if they are facing financial difficulties and advice against marketing properties during lockdown. It may also include events such as a sale being prevented by action taken by a public authority. However, HMRC have made it clear that each case will be reviewed individually.
If you believe that you may be eligible to receive the refund, you should write to the HMRC Stamp Duty Land Tax team with the details of why you believe this is applicable to you. Further information can be found here.