SDLT Explained

Higher Rate
SDLT Explained

Since 1 April 2016, higher rates of stamp duty land tax (SDLT) have applied to purchases of second and subsequent residential properties, so anyone who has a second home, such as a holiday cottage or town flat is affected. However, where someone has more than one residential property, it is worth bearing in mind that the supplementary charge generally does not apply to property which replaces the main residence. Understanding the meaning of main residence for tax purposes is therefore important.

The higher SDLT rates are 3% more than the standard rates for residential sales, and are as shown in the table below.

Purchase Price Std Rate Additional Properties
Up to £125,000 0% 3%
£125,001 to £250,000 2% 5%
£250,001 to £925,000 5% 8%
£925,001 to £1,500,000 10% 13%
Over £1,500,000 12% 15%


1What does main residence mean?
The term “main residence” could be substituted with “your home” the place you ordinarily live, where you hang your hat, where your family reside, it is usually pretty easy to determine. Even where someone has more than one residential property, it will normally be a question of fact as to which is their main residence or home, and, therefore, whether the new purchase is a replacement main residence or home and not subject to the supplementary charge. Where someone lives only at one property (for example, if other properties that they own are rented out), the property in which he or she lives is going to be his or her main residence. Where a someone has lived in more than one property (for example they live in a town house four days a week and the family home at the weekend), it is necessary to take account of the facts to determine which is the main residence. For example questions such as where the individual’s family spend their time, where any children go to school, where the individual is registered to vote, registered with a dentist and doctor’s practice. Where they have golf club or other sports club memberships, where their main branches for banks etc are located.
2Why is understanding main residence important?
The 3% supplementary charge does not apply to the purchase of a property which is a replacement for your main residence or home, even if you have other additional residential properties. This means you can move home without suffering the SDLT 3% supplement, providing it is your home that is being replaced and not for example a buy to let or a holiday cottage.

Case Studies

1Case Study One
Matt lives in a flat in Leeds. He also owns three other properties in the Huddersfield area which are let out. He sells the flat in Leeds and buys a three-bedroom house for £300,000. The sale of the flat and the purchase of the new house complete on the same day. Matt moves into the house as his new home. The fact that Matt owned additional residential properties, the three houses that he lets out is not relevant in calculating the SDLT payable on the purchase because Matt is replacing his main residence.The SDLT that is payable on the purchase price of £300,000 is £5,000 and not £14,000.
2Case Study Two
Edward has a house in Cambridge and also has two flats which he rents out. Edward’s role at work changes and he needs to move to London. He eventually sells the house in Cambridge but decides to rent in London until he can find a suitable new house. Fourteen months later, he completes on a house in Oxshott for £1 million. Although Edward had two additional residential properties at the time of the purchase of the house in Oxshott, this is a replacement for his former main residence in Cambridge and was bought within three years of the sale of that property. Therefore, SDLT is payable on the Oxshott property at the normal residential rates and the 3% supplement is not payable. Unfortunately Edward was badly advised on the purchase of the Oshott property and he actually paid £70,000 stamp duty which included the supplementary charge. In this situation Edward is entitled to a refund of £30,000.
3Case Study 3
Rea and Tom were buying a new home but were struggling to sell their existing home and as they were keen to be in their new home for the start of the new school year, Rea is a teacher, they used bridging finance to buy the new home before they completed the sale of their old one. The purchase of their new home completed in June 2017, and the sale of the old home completed in September 2017. They paid £450,000 for their new home. At the time of the purchase of the new home, Rea and Tom have an additional residential property,(their unsold old home) so they must pay SDLT at the rates for additional residences. The SDLT paid was £26,000 which includes a 3% supplement of £13,500 (£450,000 @ 3%). Once the sale of their old main residence completed in September 2017, Rea and Tom can reclaim the supplementary charge of £13,500, as the old residence was sold within the three-year window

Reclaiming the supplement

The SDLT supplement is not repaid automatically on the sale of the old home, a claim has to be made made within the relevant time limit.

The SDLT supplement must be reclaimed within three months of the sale of the former main residence or, if later, within a year of the filing date for the SDLT return for the purchase. It is important that the claim deadlines are not missed. A repayment of the SDLT supplement can be claimed where the former main residence is sold within three years of the purchase of the new home.

If you think you may have overpaid Stamp Duty on the purchase of your home please contact us with the following details:

  • main buyer’s details, if different;
  • details of the property that attracted the higher rate of SDLT, including the effective date of the purchase and the SDLT Unique Transaction Reference number;
  • details of the property sold;
  • the amount of SDLT paid on the property that attracted the higher rates; and
  • the amount of repayment claimed (i.e. the 3% supplement).