Reclaiming Stamp Duty Land Tax when replacing your main residence
The new higher rates of stamp duty land tax (‘SDLT’) have now been in force for over four months. They apply to purchases of second and subsequent residential properties where the cost of the additional property is over £40,000.
The higher rate is 3% more than the standard rate.
|Purchase price||Standard rate||Rate for additional properties|
|Up to £125,000||0%||3%|
|£125,001 to £250,000||2%||5%|
|£250,001 to £925,000||5%||8%|
|£925,001 to £1,500,000||8%||13%|
Replacing a main residence
The higher rate does not apply to the purchase of a property which is a replacement of a main residence, even if the taxpayer has additional residential properties. However, where the purchase of the new main residence happens before the sale of the old, the higher rate is initially payable. Provided the former main residence is disposed of within three years of the acquisition of the new residence, then the additional SDLT can be reclaimed.
Andrew and Helen have been trying to sell their existing home for some time. They recently found their dream home and being keen to secure it, completed on the purchase on 1 August 2016 at a price of £500,000.
As this is a second property and they still own their main residence, they have to pay the higher rate of SDLT, which is £30,000 (£125,000 @3% + £125,000 @5% + £250,000 @8%).
They eventually sell their old main residence in October 2016. They can then reclaim the additional SDLT paid, a repayment to them of £15,000.
Reclaiming the higher rate SDLT
A repayment of the higher rate SDLT can be claimed where the former main residence is sold within three years of the purchase of the new home. There is no automatic repayment, so it is important to remember to make the claim.
The claim has to be made within 3 months of the sale of the former main residence or within 12 months of the filing of the SDLT return following the purchase of the new property, if later.
The claim is made on the online form found at: www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties. The following information is required:
• personal details;
• main buyer’s details, if different;
• details of the property that attracted the higher rate of SDLT, including the effective date of the purchase and the SDLT Unique Transaction Reference number;
• details of the property sold;
• the amount of SDLT paid on the property that attracted the higher rates; and
• the amount of repayment claimed (i.e. the 3% supplement).
The claim form should be completed online and sent to HMRC at the following address:
HMRC Revenue and Customs – Birmingham Stamp Office
30 Union Street