If there is a delay in selling your old home when you buy your new one, you have to pay the higher rate of Stamp Duty Land Tax (SDLT). You can reclaim that higher rate SDLT if you sell your old home within three years. If there were “exceptional circumstances” that delayed that sale, and they were outside of your control, you could apply to HMRC to explain the delay and still attempt to claim the refund. Recently the government has announced that Covid-19 will be regarded as an “exceptional circumstance” – either the impact of the Coronavirus itself or an action taken by a public authority preventing the sale.
Richard Coombs, Tax Partner at Bates Weston looks at the government’s recent announcement.
“When you buy a second home, SDLT is charged at an additional 3% on top of the standard rate. This can often apply when you buy a new house but have been unable to sell your old one. The basic position is that provided you sell your old house within 3 years of buying the new one then you can apply for a refund of the additional 3%, which will mean several thousand pounds refunded in most circumstances.
However, if there are exceptional circumstances which mean that you were unable to sell your previous property within this timescale then HMRC will extend the deadline until the exceptional circumstances have passed. In practice, this extension was rarely used, but HMRC have recently announced that Covid-19 may be such a circumstance. There will be a lot of people who have been unable to sell their house for many months now due to the lockdown and therefore this may be a useful relaxation of the rules if it meant that the initial 3-year deadline has been missed.”
If you would like to speak to Richard Coombs regarding your own SDLT position, please do get in touch.