COVID-19: Changes to Higher Rate Stamp Duty Land Tax Announced

Stamp Duty land tax is a transfer tax on residential and other land in England and Northern Ireland and is charged at rates of up to 15% (17% from April 2021). You can find out much more here.

HMRC announced on 3 June 2020 that due to Covid-19 a Stamp Duty refund may still be granted if your new home was purchased on or after 1 January 2017 and the three-year period for selling your old main residence has passed.

The 3% surcharge

It’s not unusual for people to be stung by a higher Stamp Duty when they are buying a new home. If you haven’t sold your previous main residence beforehand, the new property is classed as a second home, which carries an additional 3% higher rates of SDLT.

This can happen for various reasons: often if there is a delay due to a buyer pulling out, or difficulty in selling a matrimonial home in the right time frame.

Refund of the 3% Additional rates

Under the normal rules if you sell your previous main residence within 3 years of paying the higher rate of Stamp Duty on your new main residence, you can claim money back from the HMRC.

COVID-19 Extension for Stamp Duty Refunds

But here’s the good news: due to Covid-19, many house sales have been delayed. As result, HMRC announced on 3 June 2020 that due to Covid-19 a Stamp Duty refund may still be granted if your new home was purchased on or after 1 January 2017 and the three-year period for selling your old main residence has passed.

To be able to get the refund, the delay in selling must be because of reasons outside your control. These may be, but are not limited to:

  • the impact of coronavirus (COVID-19) preventing the sale; or
  • action taken by a public authority preventing the sale

Once the reason has ended, you must sell the previous home to be able to apply for the refund. You can then write to HMRC with an explanation of why you were unable to sell your previous main home within 3 years and include the other required information.

Did you know? SDLT relief for annexes

You may have been charged extra Stamp Duty on a property containing an annex or granny flat when you bought your property. Many buyers are not aware that the rate of Stamp Duty for these multi-dwelling properties is reduced, thanks to an allowance called Multiple Dwellings Relief, and end up being overcharged.

Claiming an SDLT Refund

Contact Patrick Cannon as soon as possible if you think that you might be due a Stamp Duty refund. Patrick can advise you whether you can claim a refund and make the claim to HMRC for you.

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