How do I check if I am eligible for a refund?
If you have purchased a new main home but your existing property has not yet been sold, you will have paid a higher rate of stamp duty land tax (SDLT). This can be a common situation if the sale of the old property falls through at the last minute, or it simply takes a long time to sell, and you want to continue with completing the purchase of your new property.
A higher rate of SDLT applies when you buy another residential property worth at least £40,000 and:
- You own a residential property already worth more than £40,000 (full or part ownership, anywhere in the world)
- You have not sold or gifted the old property
- No one else has a lease on the property, with at least 21 years remaining
How long do I have to make a claim for a refund?
You can make a claim to obtain a refund if no more than three years (36 months) has lapsed between the purchase of the new property and the sale or ‘giving away’ of the old property.
How much is the refund?
It is only the higher rate element of the SDLT paid that can be claimed, as illustrated by the example below;
PURCHASE NEW HOME and SOLD OLD HOME
1 JUNE 2020 COSTING £650,000
SDLT would be due of £22,500 being:
- £125,000 x 0%
- £125,000 x 2%
- £400,000 x 5%
PURCHASE NEW HOME and STILL OWN OLD HOME
1 JUNE 2020 COSTING £650,000
SDLT would be due of £42,000 being:
- £125,000 x (0% + 3%)
- £125,000 x (2% + 3%)
- £400,000 x (5% + 3%)
The additional rate of 3% added to the normal rates therefore mean that an extra £19,500 of SDLT is paid because the old home has not yet been sold.
It is only the additional £19,500 that could be claimed as a refund.
How do I claim a refund?
In most cases your solicitor will highlight the position and likely help you with a claim, but you can also ask an accountant to assist you or make the claim yourself.
The key is to ensure you make the claim in time. You may be able to obtain a refund if the claim is outside the 36-month period and there were exceptional circumstances, but you have to explain these to HMRC.
Otherwise, claims can be made online if a Government Gateway is available to you or by post using the forms provided in the link below.
There are other situations where you may be paying higher rate SDLT and no refund is due, you should therefore check your situation carefully or seek advice.
The rules above apply to properties purchased in England and Northern Ireland only and assume you are UK resident. Scotland and Wales have different rules.
The rates used in the example above are correct for the transaction date, SDLT rates have changed since then.
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Date published: 11 January 2023