Will Coronavirus cost you 3% SDLT?

The issue

Since 2016 many house buyers will have paid the additional 3% SDLT surcharge on a house purchase. This would have been the case if they owned more than two houses at the end of the day of purchase (except where the purchase was a replacement of a main residence which had been sold). Sometimes a house buyer buys a replacement main residence without disposing of the old one. In this case, although they are still liable for the 3% surcharge at the outset, if they then sell their old residence within three years they are able to claim a refund of the surcharge. Lock-down has massively affected the housing market and sales have slowed down dramatically since the beginning of April. Inevitably this will mean that some prospective sellers will have been frustrated in their attempts to sell their old property within the three year window.


Professor Neil Ferguson bought his main residence for £1,000,000 on 10 May 2017 but still kept hold of his old residence (as he found it useful to keep two houses!). He had always earmarked 10 May 2020 as the time that he needed to sell the property by and the sale process started to move forward in January 2020. After a few typical delays it was soon the end of March and lock-down completely collapsed the chain. Poor Neil now believes he must wave goodbye to his £30,000 refund.

All may not be lost

Although there are no provisions within the Coronavirus Act 2020 giving power to extend the three-year period there are some provisions which allow regulations to be made in the public interest for the variation of the legislation. Anecdotally on 23 April 2020 HMRC’s head of stamp taxes said that this was being ‘looked at’ but would not say more than that.

Forbes Dawson view

Although there may be some extension to the three year rule we are not holding our breath and think that it will be well down HMRC’s list of priorities. Where the new house is much more expensive than the old house it can be worth structuring a disposal of the old house (perhaps to a company) so as to trigger the 3% refund. Clearly the tax costs of triggering the disposal would have to be compared to the value of the refund. Perhaps the main lesson here is not to leave things until the last minute!




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