What is the 3% surcharge?

Buyers who own more than one property are charged an additional 3% on top of normal SDLT rates when purchasing.

The surcharge does not apply if the property being purchased is the buyer’s new main residence. However, in practice the higher SDLT rate has to be paid on purchase unless the current main residence is sold before or on the same day as the new one is bought. The buyer must then apply to HMRC for a refund once the previous main residence is sold.

Ordinarily, the previous residence must be sold and the refund applied for within a strict 3-year time limit from the date on which the new property is purchased.

When will buyers qualify for the extension of time to get a refund of the 3% surcharge?

Due to the coronavirus pandemic, many property transactions have been delayed. HMRC is therefore granting an extension of time for buyers who purchased their new home on or after 1 January 2017 and have been unable to sell the previous residence within the 3 year time limit.

HMRC say that the delay in selling must be because of reasons outside of your control, giving the following reasons as non-exhaustive examples:

• the impact of coronavirus (COVID-19) has prevented the sale
• an action taken by a public authority has prevented the sale

How long will the extension last for?

HMRC has not revealed any further details regarding the extension. As long as efforts are being made to sell the property, and this has not been possible due to the coronavirus epidemic, it would appear the extension should last as long as it takes to sell the previous main residence.

If you have been prevented from selling your main residence due to coronavirus and have paid the 3% surcharge, please get in touch with Streathers regarding next steps in recouping SDLT.