Stamp duty: Government relaxing three-year rule for reclaiming surcharge
The Government is relaxing the three-year rule for reclaiming the Stamp Duty Land Tax (SDLT) surcharge.
Under the SDLT rules, individuals that purchase a new property prior to selling their main residence are subject to a three per cent surcharge, which can be reclaimed if they sell their old property within three years.
However, because of the disruption caused by the coronavirus pandemic, and the resulting lockdown measures, many people have been unable to sell their home before the three-year time limit expired, with the property market being temporarily put on hold.
As a result, the HM Revenue & Customs (HMRC) internal manual has been updated, and now states that claims can be made after the three year period expires in circumstances where the time limit has expired as a result of the COVID-19 pandemic. However, legislation on the change is still to be published.
The guidance states that exceptional circumstances include;
- Being prevented from selling the property owing to Government guidance during the COVID-19 pandemic; or
- Other action taken by a public authority preventing the sale of the property
However, it has also been confirmed that sellers must complete the sale of their main residence as soon as they ‘reasonably could’ after the lockdown to claim the SDLT refund, but it has not been confirmed how lenient HMRC will be on this timeframe.
The change is set to be introduced in the Finance Bill 2020, and according to industry experts, will be a permanent change.
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