Relaxation of 3 year rule for reclaiming 3% Stamp Duty Land Tax supplement
Since 2016 purchasers of second homes have been subject to an additional 3% supplement on the SDLT they pay. This rule generally does not apply to individuals who buy and sell their main residence on the same day.
However, where a seller has been unable (or unwilling) to complete the disposal of their old main residence by the time they complete on the purchase their new main residence, they are liable to pay the 3% supplement, but with the ability to claim a refund of it if they sell the old main residence within 3 years.
The government has listened to concerns from property sellers and advisers that, because of the COVID-19 pandemic, the property market has not been functioning as it should and it may have caused some people to complete the sale of their old main residence outside that 3 year window.
As a result, HMRC announced on 3 June that it would allow that 3 year window to be extended where the seller has been unable to dispose of the old main residence because of ‘exceptional circumstances’. The guidance from HMRC gives specific examples of what would constitute exceptional circumstances as including: (i) being prevented from selling the property owing to government guidance during the Covid-19 pandemic; or (ii) other action taken by a public authority preventing the sale of the property.
This relaxation only applies where the new main residence was purchased on or after 1 January 2017 and HMRC will consider claims on a case by case basis.
The legislation effecting this change has not yet been published and so it remains to be seen how much discretion HMRC will actually have in deciding these cases.