The Government is to relax the three-year rule for reclaiming the stamp duty surcharge which should help hundreds of households in the UK, said leading tax and advisory firm Blick Rothenberg.
Sean Randall, a partner at the firm and a leading expert on stamp duty, said: ‘People who have purchased a new home but were unable to sell their old home before the time to do so expired as a result of COVID-19 will soon be able to reclaim the surcharge if they sell their old home as soon as possible, saving them tens of thousands of pounds.
‘The change will apply to old homes sold from the start of this year where it can be shown that the sale fell after the time for selling the old home expired due to COVID-19. Individuals who decided to purchase a new home while retaining their old property would have paid a surcharge of 3%, but the deadline for selling their old home is being relaxed by the government who realise that it is extremely difficult to sell residential property at this time.’
Sean added that: ‘Up until now individuals buying additional dwellings must pay a 3% stamp duty surcharge. This includes homebuyers that fail to sell their old home before they buy or turn their old home into a Buy-To-Let. Homebuyers can reclaim the surcharge if they dispose of their old home within three years.
‘Those who purchased new homes in the second half of 2017 may have lost out on making reclaims due to the housing market freeze imposed during lockdown or having to self-isolate. They will now be able to still make a reclaim even though their old home is sold after the deadline due to exceptional circumstances provided that it is sold as soon as possible after the exceptional circumstances cease.’
Sean concluded that: ‘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.’
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