SDLT surcharge - Expiry of the transitional period on 26th November 2018
First posted by John Shallcross on 21 November 2017, updated on 27 November 2018.
25 November 2017 marked the second anniversary of the 2015 Autumn Statement in which the Government announced that “higher rates of stamp duty land tax” would apply to purchases of “additional residential properties” starting on 1 April 2016. HMRC refer to it as HRAD, it is commonly called the 3% surcharge. It has caused all sorts of complications and Blake Morgan have helped many people understand how it applies to their transactions.
There are transitional provisions for purchases in England completing by 26 November 2018. (For purchases in Wales completing on or after 1 April 2018 “Land Transaction Tax” applies instead of SDLT, but has similar rules.) Buyers in some situations needed to complete their purchase by 26 November 2018 if they were to escape the 3% surcharge. Although we are now past the 26 November 2018 deadline, this piece has been left on line in case it is of assistance. There are likely to be quite a few people who completed a purchase by 26 November 2018 and paid the 3% extra when they should not have done so. They might be able to reclaim the extra 3% paid.
The transitional rules could benefit people buying a property to live in as their only or main residence and who have other property interests “counting against them”. More specifically they affect those who had previously sold (or at least disposed of their major interest in) another property which they used to live in but:
- Their sale or disposal was before 26 November 2015 or
- They last lived in the property as their only or main residence before 26 November 2015.
Such people would need to complete their purchase by 26 November 2018 or face the 3% stamp duty land tax (SDLT) surcharge.
John Shallcross, Blake Morgan's stamp duty land tax specialist, provided some examples of those buyers affected by the ending of the transitional period on 26 November 2018: