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COVID-19: Updated exceptional circumstances for higher rate SDLT refunds

Updated 5 June: Homeowners in England and Northern Ireland unable to sell their home within three years of purchasing a replacement property due to the coronavirus pandemic may still claim a stamp duty land tax (SDLT) refund.

Following a written ministerial statement by the Financial Secretary to the Treasury and in light of the corornavirus pandemic's impact on the housing market, HMRC has updated its guidance on exceptional circumstances for claiming an SDLT refund outside of the normal time limits. This will allow homeowners to apply for a refund of the higher rate of SDLT even if the previous home was not sold within the three-year time limit, where that period came to an end on or after 1 January 2020.

In England and Northern Ireland the purchase of a second home is subject to an additional amount of SDLT equating to 3% of the purchase price. Where the second home is a replacement home, but there is a delay in selling the original home, a refund of the additional SDLT can be claimed where the first home is sold within three years of the new purchase.

HMRC has updated its guidance on exceptional circumstances that allow refunds following a sale outside of the normal three-year limit to specifically include the impact of COVID-19 preventing the sale. The updated guidance can be found on the following pages:

The written ministerial statement also advises that once this reason has ended, the previous home must be sold as soon as practicable to be able to apply for the refund. The claim must include an explanation why the taxpayer was unable to sell the previous home within three years. Decisions will be made by HMRC on a case-by-case basis.

This change to the guidance in England and Northern Ireland follows the Scottish Parliament temporarily extending its refund period for land and buildings transaction tax from 18 months to three years.