A limited extension has been announced of the three-year window to claim a refund of the SDLT supplemental charge paid when purchasing a new residential property before selling a previous residence.

On 3 June 2020, by a written statement in the House of Commons and a written statement in the House of Lords, the government announced amendments extending the three-year period in which a previous residence can be sold in order to trigger a refund of the SDLT supplemental 3% charge paid on purchasing an additional residence.

The statements confirm that:

  • The amendment will apply to refund windows ending on or after 1 January 2020.
  • Relief will only be available where the taxpayer was not able to sell the previous residence within the three-year window due to “exceptional circumstances” outside their control.
  • The qualifying sale must be made as soon as practicable upon cessation of the exceptional impediment to sale.

House for SaleOther updated HMRC guidance states applications must be made to BT Stamp Duty Land Tax, HM Revenue and Customs, BX9 1HD, after the sale of the previous main home and include (with the other required information) an explanation of why the taxpayer was unable to sell the previous main home within three years.

The existing three-year window caters for unexpected events, or delays marketing or selling a property for example a delay elsewhere in the chain, illness, delay in the renovation of a property before being sold or a general downturn in the economy.

The ‘exceptional circumstances’ include the impact of coronavirus (COVID-19) preventing the sale and action taken by a public authority preventing the sale. Although other circumstances may be exceptional, a funds shortage or decision not to sell (even if loss-making, for example in a market downturn) will not be regarded as exceptional circumstances.

There is no pre-transaction clearance for determining whether circumstances are exceptional. This is to be considered on its own merits, on a refund application after the sale of the previous main residence.

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