SDLT Extension of the three year time limit within which to sell a previous home.

SDLT_Geek

These issues are mentioned in the recent update to the House of Commons Library briefing paper on SDLT on residential property.  https://commonslibrary.parliament.uk/research-briefings/sn07050/?doing_wp_cron=1592121562.4145379066467285156250

SDLT_Geek

The draft amendments to the Finance Bill were published yesterday. They give proposed wording for the extension of the three year time limit within which to sell an old home following the purchase of a new home (in order to be entitled to recover the extra 3% paid on the new home).

Some most relevant wording is: "if HMRC are satisfied that the purchaser or the purchaser’s spouse or civil partner would have disposed of the major interest in the sold dwelling within that three year period but was prevented from doing so by exceptional circumstances that could not reasonably have been foreseen, such longer period as HMRC may allow in response to an application made in accordance with sub-paragraph (7B)".

SDLT_Geek

The exceptional circumstances extension proposed is for cases where the old home cannot be sold within three years of the purchase of the new home.  There is a similar problem for a person who (if they are to escape the 3% surcharge) needs to complete the purchase of a new home within three years of the sale of an old home (because they own another property).
  
Representations have been made to Government to allow an exceptional circumstances extension in this situation as well.  I heard today that this idea had been considered by Government, but was rejected.  So it seems likely that the exceptional circumstances extension will only apply to cases where the old home cannot be sold within the three years following the purchase of the new home.

SDLT_Geek

The exceptional circumstances exception is to be brought in by the Finance Act 2020.  I read that Royal Assent is expected by 22 July 2020 to bring it into effect.  It only applies to help where the sale of the old home is after the purchase of the new home and the three year time limit could not be met because of "exceptional circumstances".

SDLT_Geek

The Finance Act 2020 did indeed gain Royal Assent on 22 July 2020.  I have yet to see the text to check the section number for the new exceptional circumstances rule.  It was at clause 76 of the Bill.

SDLT_Geek

I have checked the Finance Act 2020 which is now available https://www.legislation.gov.uk/ukpga/2020/14/contents/enacted.  The provisions for stamp duty land tax are in section 76.

SDLT_Geek

Has anyone yet submitted a claim for a refund of the 3% extra stamp duty using a sale of the old home outside of the usual window of 3 years?  I have not heard of any.  It will be interesting to know what the experience is.  The HMRC guidance here https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09807 indicates that HMRC take a very restrictive view of what qualifies as "exceptional circumstances".

SDLT_Geek

HMRC said at a meeting today that they have had 50 applications for refunds of the 3% surcharge, where the old home was sold more than three years after the new home was bought, relying on the new "exceptional circumstances" ground.  They say they have processed and made payments on most of them and receive about one fresh application a day.  A few they have rejected and for some they are requesting more information.

SDLT_Geek

There is another thread mentioning these issues here: https://forums.moneysavingexpert.com/discussion/6194818/stamp-duty-refund-third-property#latest

SDLT_Geek

The Tier 4 restrictions effective from 20 December 2020 have exceptions to enable house moves to continue.  On this basis HMRC might well not consider being in a Tier 4 area to amount to exceptional circumstances for the purposes of seeking an extension to the three year period within which to sell a former home.  https://forums.moneysavingexpert.com/discussion/6225735/moving-in-tier-4#latest