Query about liability for higher rate of stamp duty (condition D)

afro76

Hello.

I'd be grateful for any views on liability for the higher rate of SDLT in the following situation:

An individual purchases a main residence (M) in 2018 and has lived there ever since. There is ample evidence that would be acceptable to HMRC to prove that this is their main residence.

The same individual inherits a house (IH) in 2023 (sole beneficiary). Although the title deeds have not yet been changed, probate has been granted so it's clear that the individual is the legal owner. They visit the house regularly, including staying overnight at least once a month, and pay council tax in respect of it, but have never lived there for any length of time. The intention has always been to sell this property - but that has not happened yet.

In mid-2025, the individual sells M, and shortly before that purchase completes, has an offer accepted on what will be a new main residence (M2). The individual moves into IH as a temporary measure while waiting for that purchase to go through - it will probably take around 6-9 months for reasons that are not relevant here. This means that the individual will still own IH when they complete on M2.

To my mind, M2 is clearly a replacement for M, so in this case condition D is not met, meaning that the standard - and not the higher - rate of SDLT applies. However, I think the situation may be complicated by the temporary move to IH, and my question is whether the temporary stay at IH will be enough for it to qualify as the "sole or main residence", meaning that the higher rate will need to be paid at the point of purchase of M2 (and a refund applied for once IH is sold), or whether the more detailed "three-year disposal" rules will apply, meaning that only the standard rate of SDLT is payable? During the temporary stay all mail etc. will be redirected to IH, the individual will likely register at a dr's surgery near IH, but the intention, as evidenced by the accepted offer on M2, is for the stay at IH to be short-term and for M2 to be the next main residence.  

The closest example I can find on HMRC's website is:

"Ms G currently owns two buy-to-let properties, which she has owned for a number of years.  She sold her previous main residence six months ago and moved temporarily into one of her buy-to-let properties, whilst looking for a new main residence.  She buys a new main residence, moves into it and rents out her buy-to-let property to tenants again.  

Ms G will be treated as replacing her main residence if the property she sold six months ago was her only or main residence and she lived in it as her only or main residence at some time in the past 3 years.  The fact that she lived in one of her buy-to-let properties in the interim period does not affect this. "

But I think there are different rules around BTL properties so am not sure it's directly analogous.

Grateful for any views from anyone with more expert knowledge than me!

 

user1977

afro76 said:

I think there are different rules around BTL properties 

Which different rules are those? The situation seems analogous to me.

SDLT_Geek

afro76 said:

Hello.

I'd be grateful for any views on liability for the higher rate of SDLT in the following situation:

An individual purchases a main residence (M) in 2018 and has lived there ever since. There is ample evidence that would be acceptable to HMRC to prove that this is their main residence.

The same individual inherits a house (IH) in 2023 (sole beneficiary). Although the title deeds have not yet been changed, probate has been granted so it's clear that the individual is the legal owner. They visit the house regularly, including staying overnight at least once a month, and pay council tax in respect of it, but have never lived there for any length of time. The intention has always been to sell this property - but that has not happened yet.

In mid-2025, the individual sells M, and shortly before that purchase completes, has an offer accepted on what will be a new main residence (M2). The individual moves into IH as a temporary measure while waiting for that purchase to go through - it will probably take around 6-9 months for reasons that are not relevant here. This means that the individual will still own IH when they complete on M2.

To my mind, M2 is clearly a replacement for M, so in this case condition D is not met, meaning that the standard - and not the higher - rate of SDLT applies. However, I think the situation may be complicated by the temporary move to IH, and my question is whether the temporary stay at IH will be enough for it to qualify as the "sole or main residence", meaning that the higher rate will need to be paid at the point of purchase of M2 (and a refund applied for once IH is sold), or whether the more detailed "three-year disposal" rules will apply, meaning that only the standard rate of SDLT is payable? During the temporary stay all mail etc. will be redirected to IH, the individual will likely register at a dr's surgery near IH, but the intention, as evidenced by the accepted offer on M2, is for the stay at IH to be short-term and for M2 to be the next main residence.  

The closest example I can find on HMRC's website is:

"Ms G currently owns two buy-to-let properties, which she has owned for a number of years.  She sold her previous main residence six months ago and moved temporarily into one of her buy-to-let properties, whilst looking for a new main residence.  She buys a new main residence, moves into it and rents out her buy-to-let property to tenants again.  

Ms G will be treated as replacing her main residence if the property she sold six months ago was her only or main residence and she lived in it as her only or main residence at some time in the past 3 years.  The fact that she lived in one of her buy-to-let properties in the interim period does not affect this. "

But I think there are different rules around BTL properties so am not sure it's directly analogous.

Grateful for any views from anyone with more expert knowledge than me!

 

There are five conditions to meet for the replacement rules to apply to help you (ref Condition D).  They are summarised here: https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09800  It sounds as if you will meet all five.

You will see it is no objection that you lived in another property in between the sale and the purchase, whether on the basis of renting it, or of owning it, whether temporary or sufficiently long term to count as a "residence". 

What is important (taking a cautious approach) is that you do not accidentally fall foul of condition 5, by an ill timed assent of the inherited property to you at a time when arguably you intend to live in it as your only or main residence.

afro76

Thank you so much for this, @SDLT_Geek. It confirms what I thought/hoped.

But could you elaborate on your last point? The inherited property has already passed to the individual in question. Do you mean that changing the title deeds to reflect the new ownership in the Land Registry during the temporary period of residence might be ill advised?

SDLT_Geek

afro76 said:

Thank you so much for this, @SDLT_Geek. It confirms what I thought/hoped.

But could you elaborate on your last point? The inherited property has already passed to the individual in question. Do you mean that changing the title deeds to reflect the new ownership in the Land Registry during the temporary period of residence might be ill advised?

It might be a bit theoretical, but looking at condition 5, what you would want to avoid is a change of ownership of the inherited property at any time between the sale of the old home and the purchase of the new one, if arguably at the time of the change you intend to live in the inherited property as your only or main residence.

It might therefore, in your situation, be safest not to transfer the ownership of the inherited property until after the upcoming purchase has completed.