Stamp Duty rates were increased for second homes from April 2016; individuals purchasing a second home, or a buy-to-let investment property were subject to higher rates.

The rules extended to those purchasing a property that they intended to move into as their main residence whilst still owning another residence.  Married couples are also treated as being joint purchasers regardless of their actual ownership; spouses cannot purchase residential property separately to avoid the higher rates.

Broadly speaking, the higher rates for residential property were 3% higher in each SDLT rate ‘band’ that was applied to the property value.

The additional SDLT paid on various acquisition costs were as follows from 1 April 2016 to 7 July 2020.

House PriceStandard SDLTHigher Rate SDLTExtra SDLT paid
£100,000£0£3,000£3,000
£250,000£2,500£10,000£7,500
£500,000£15,000£30,000£15,000
£750,000£27,500£50,000£22,500
£1,000,000£43,750£73,750£30,000
£2,000,000£153,750£213,750£60,000

From 8 July 2020 to 1 October 2021 the lower rate band of £125,000 was extended to £500,000 (but then lowered to £250,000) to provide a boost to the UK housing market during the Covid pandemic, however the 3% surcharge was still in place resulting in higher charges for additional property purchases.  

From 1 October 2021 the temporary SDLT lower rate band extension drops back to £125,000 and the variances shown above will return.

SDLT Refund

Should you subsequently sell your main residence within 3 years of the date of purchase of the second property, the additional SDLT paid can be reclaimed as if your purchase was only subject to the standard rates.  The three-year time period is considered sufficient time for an individual to dispose of their previous residence in consideration of the usual delays that may occur for marketing and selling a property.  HMRC must have your refund request within 12 months of the sale of that previous main residence, or within 12 months of the filing date of the return relating to the new residence, whichever is later.

You may still be able to apply for a refund if you purchased your new home on or after 1 January 2017 and were unable to sell your previous home within 3 years due to reasons outside of your control; applications can be made to HMRC should this be the case.  Legitimate reasons listed by HMRC are restrictions imposed by a public authority or government agency or circumstances related to the Covid pandemic.

Please contact us if you purchased additional residential property after 1 April 2016 and believe that you may be entitled to a refund arising from a subsequent sale of your main residence.

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