Government to relax stamp duty surcharge reclaim date

The government is relaxing the three-year rule for reclaiming the stamp duty surcharge.

People who purchase new homes before selling their old home are subject to a 3% surcharge, which they can reclaim provided they sell the old property within three years.

However, the lockdown caused by the coronavirus pandemic means some were unable to sell within the time limit. The HMRC internal manual has been updated to specify that people can claim after the three years in these circumstances, though legislation on the change is yet to be published.

The guidance states: “If you purchased your new main residence on or after 1 January 2017, you may still be eligible to apply for a refund if you were prevented from selling your previous main residence before the expiry of the 3-year time limit owing to exceptional circumstances beyond your control.”

The guidance added: “Exceptional circumstances might include: being prevented from selling the property owing to government guidance during the Covid-19 pandemic; or other action taken by a public authority preventing the sale of the property.”

Sellers will need to have sold the previous main residence as soon as they ‘reasonably could’ after the lockdown to claim the stamp duty refund.

Sean Randall, a partner at tax and advisory firm Blick Rothenberg, said: “The announcement is welcome and will also help if, the country is put into a second lockdown. The change, which will be introduced at the Report Stage of the Finance Bill 2020, will be permanent.

“We have to wait for the detail, but there is no indication that the government is planning to use stamp duty to kick-start the housing market. I expect it is watching the number of completions closely to determine whether giving another tax holiday is necessary.”