An Update on Reclaiming a Stamp Duty Surcharge

Ruth Flinn

04 June 2020

The government is preparing to relax the rules surrounding when you can apply to reclaim a stamp duty surcharge.

For some time now a significant surcharge has applied, generally speaking, if you owned two or more properties when completing a purchase. An exemption applied if you had bought a main residence to replace a main residence, but the sale of your current main residence had yet to complete. In those circumstances, whilst you had to pay the surcharge on your stamp duty, you could apply for a rebate if the sale of your former main residence completed within 3 years.

The Government has now recognised that Covid-19 has badly affected conveyancing transactions. Legislation is being brought forward to allow you to apply to reclaim the surcharge beyond that three year period, if you were unable to complete a sale for reasons beyond your control.  Your new main residence must have been purchased after 1 January 2017. Such exceptional circumstances may include being prevented from selling due to the government’s own guidance during the pandemic, or the closure of public authorities which has prevented a sale from completing. Each case will be considered on its own merits by HMRC.

As stamp duty surcharges can amount to tens of thousands of pounds, this is a very welcome move from HMRC for anyone with a transaction which is presently being delayed. The rules around stamp duty are complicated and you should seek specialist advice.