HMRC has confirmed that they will extend the normal three year limit for refunds of higher rate Stamp Duty Land Tax (SDLT) if a sale of a previous main residence was prevented due to the government’s coronavirus lockdown restrictions.
Normally, if a seller buys a second home and pays the higher rate of SDLT, they can apply for a refund it they sell their previous main residence within three years. However, the government has said that if a sale of a previous main residence before the end of the normal three year limit was prevented because of the coronavirus restrictions, this may qualify as exceptional circumstances and the seller may still apply for a refund.
In order to qualify for refund, the seller must sell the previous main residence as soon as they reasonably can after being prevented from doing so. The sale must take place before HMRC will consider whether the circumstances are exceptional. They will consider each case individually.
HMRC provide more guidance online including examples of what would and would not be considered exceptional circumstances. Example of not qualifying include:
- Taking over three years to sell the previous main residence after the government eased restrictions on the property market
- Waiting over three years for the property market to improve, to obtain a better price for the previous main residence
- Not beginning to market the previous main residence for almost three years