Increased SDLT When Replacing Your Main Residence

April 13, 2016

Residential Property, Wills and Probate

Increased SDLT When Replacing Your Main Residence

Homeowners who do not manage to sell their existing home when buying a new main residence will feel the sting of the higher rate of Stamp Duty Land Tax (‘SDLT’) on their purchase. 

For those who buy a replacement main residence, whilst still owning their previous home, will now have to pay the increased rate of SDLT, as the purchase is of their second residential property. 

However, if they are able to sell their previous main residence within three years of buying the new property, they will be able to reclaim the additional tax paid.

The claim for a refund of overpaid SDLT can be made by filling out an online form available from the HMRC website. This then has to be printed out and posted to the Stamp Office in Birmingham. It is anticipated that this service will be fully digitised in due course.

The claim must be made either within three months of the completion of the sale of the previous residence, or within one year of the SDLT filing date for the purchase of the new property, whichever is later.

Example: 

Anthony’s flat had been on the market for eight months by the time his purchase of The Glebes completed on 6 April 2016. He had no offers on the flat, but there had been interest.

Anthony purchased The Glebes for £200,000. What he had not appreciated was that whilst his flat remains on the market, this purchase is technically of a second residential property and therefore attracts the higher rate of SDLT. He pays SDLT on his purchase of £7,500.

Had Anthony completed before 1 April 2016, he would have paid SDLT of only £1,500. 

As long as Anthony sells his flat within three years of paying the higher rate of SDLT (i.e. by 5 May 2019), then he can apply for a refund of the extra tax paid – in this case £6,000.

Anthony cannot simply ‘net’ the difference. He must pay the tax, and then claim a refund from HMRC. 

posted by Anna Casey-Woodward | April 13 2016