HMRC has issued new guidance to help landlords, property owners and their accountants navigate the refund process for higher rate Stamp Duty Land Tax (SDLT) when selling additional properties. This clarification is particularly relevant for those who have paid the higher rate on a new home purchase and are now selling their previous main residence.
Eligibility for SDLT Refund
According to the updated guidance, property owners can apply for a refund of the higher rate SDLT if they sell their previous main home within three years of purchasing a new one. This refund applies to the primary buyer of the property charged at the higher rate, as well as to accountants acting on behalf of the buyer.
To qualify for the refund, the previous main home must be sold within the specified three-year period. However, HMRC acknowledges that exceptional circumstances may sometimes prevent a timely sale. If such circumstances apply, the refund can still be claimed, provided the old home was sold without further delay once the issues were resolved.
Key Deadlines for Claims
For those whose previous main home was sold on or after 29 October 2018, the refund request must be submitted to HMRC within either 12 months of the sale date or 12 months after the filing date of the SDLT return for the new main home—whichever comes later. If the sale of the previous home took longer than three years due to exceptional circumstances, it’s still possible to apply for a refund. This condition applies if the new home was purchased on or after 1 January 2017.
HMRC makes it clear that typical property transaction delays, such as difficulties finding a buyer or a breakdown in the sale chain, do not count as exceptional circumstances. The onus is on the property owner to sell the previous home promptly once the reasons for any delay have been resolved.
How to Apply for a Refund
To request a refund, taxpayers need to provide HMRC with detailed information about the property that incurred the higher SDLT rate, including the effective date of purchase and the SDLT unique transaction reference number. They must also provide details of the previous main home sold, such as the effective date of sale, the property’s address, and the buyer’s name.
The SDLT unique reference number, an 11-character code found on the SDLT5 certificate, is essential for this process. The SDLT5 is issued by HMRC after a property transaction is completed to confirm that the SDLT return has been received and the tax paid.
Refund claims can be submitted online through the Government Gateway portal or via form SDLT16, which needs to be completed electronically. Accountants and tax agents acting on behalf of clients must obtain written consent before making a claim.
These updates from HMRC provide much-needed clarity for property owners and investors, ensuring that those eligible for a refund can navigate the process more efficiently and avoid missing crucial deadlines.
