Higher rate Stamp Duty on Additional Property – How to claim it back?

Are you buying a second property in the UK? There is a stamp duty cost that catches a surprising number of buyers off guard.

When you buy a residential property in England or Northern Ireland, HMRC looks at whether you own any other residential property anywhere in the world at the end of the day of completion. If you do, the higher rates of SDLT apply automatically. That means the standard rates plus a 5% surcharge across every band of the purchase price. For example, on a £400,000 purchase, that surcharge adds £20,000 to your stamp duty bill before you have even turned the key.

For pure investment purchases, a buy-to-let for instance, where you are keeping your existing home, the surcharge applies and there is no mechanism to reclaim it. That is simply the cost of owning more than one property.

Where it gets more interesting is when the new property is replacing your main home. If you are upsizing, downsizing, or moving and you buy the new home before your old one sells, the surcharge applies at completion because you temporarily own two properties.

But it does not have to be permanent. If your old property was your main residence and you sell it within three years of completing the new purchase, you can claim a full refund of the surcharge.

The same logic applies if you are moving to the UK from abroad and still own a property overseas. If that overseas property was your main home and you sell it within the three-year window, you can claim refund on the surcharge.

The claim is made using HMRC’s online service, known as form SDLT16. The deadline is the later of 12 months from the date of sale of the previous property, or 12 months from the filing date of the original SDLT return.

However, HMRC may agree to an extension of this period under exceptional circumstances. But everyday delays such as a broken chain, difficulty finding a buyer, or a fall in property value do not qualify for the extension.

Have you ever paid the surcharge and found yourself unsure whether your situation qualified for a refund? Please feel free to comment your situation and we could help.