Are you caught in the SDLT trap?

Tom Lacey profile image

Tom Lacey, Tax Director

Tom trained at Smith & Williamson in Salisbury and went on to work for Dixon Wilson in London and then Moore Blatch solicitors before joining Wilkins Kennedy in June 2017.

Sept. 26, 2017


recent story reported that HMRC has handed back £127m in Stamp Duty Land Tax (SDLT) charges. Despite the daunting headline, these claims are perfectly legitimate and apply to anyone who has sold their main residence at some point after buying a replacement.

In April 2016 an additional SDLT surcharge was introduced to all buy-to-let property purchases, as a way of levelling the playing field between investors and first time buyers. However, some homeowners find themselves caught out by the tax. Those who purchase residential property to replace their main home, but keep hold of their previous property, to for example carry out maintenance works or wait for a sale to come through, are being caught by the additional 3% charge.

It applies because, even though the main residence is being replaced, these homeowners are for some reason unable to sell at the same time as the purchase of the additional property. This leaves many people with a large bill for SDLT – even though they are likely to be eligible for relief.

As long as it is the main residence that is being replaced, and is a not a buy to let purchase, the SDLT surcharge can be reclaimed under replacement residence relief. Those already doing this have benefitted from HMRC’s £127m refunds, with an average claim worth around £11,000 and the daily refund amount hitting £265,000.

In order to qualify for an SDLT refund, homeowners replacing their main residence have three years to sell their previous home. The time limit for when a claim can be made by is either:

  • 3 months from sale of the old home
  • 12 months from the filing date of the SDLT return for the purchase of the new home, whichever is later

If you are involved in any recent property purchases, and you think you might be eligible for the tax relief, then you might want to follow a few tips:

  • Make a note of the key dates of property sale and property purchase, to ensure that any deadlines for refunds are not missed
  • The time limits run from the ‘effective date’ for SDLT – this is completion day, i.e. the day on which you gain keys to the property – but dates can differ, so be sure to make sure the effective date is confirmed with you conveyancing solicitor
  • Keep a copy of the SDLT return for the purchase of the new home as this will have details necessary for a claim
  • Take advice early to confirm whether 3% SDLT is payable and budget if it is

You can find out more information about how to make a claim here. If the rules are not adhered to, there are significant consequences and hefty fines for those who do not comply.

You can also apply for the relief if you sell your old home, whilst already owning other investment properties, but purchase a new one at a later date – as long as you are replacing your main residence. Look out for more on this later, as I will write about this topic in more detail.

Circumstances will differ according to individual circumstances, so for more tailored advice that is suited to your needs, we would recommend seeking professional advice from the tax team at Wilkins Kennedy. Contact us today to see how we can help.

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