Stamp Duty Surcharge Query

[GR_TVR]

Hi,

My friend is about to purchase a home with his wife - she hasn't owned a property before.

He bought a flat in circa 2013 which was his main residence, but then moved back home with his parents and let it out in Feb 2015. It is still let out now and he has no intention to sell.
He has been living with his parents since, and this new house will be his main residence again.

He was under the impression he would have to pay the second home stamp duty surcharge on this new home, however his solicitor is telling him he doesn't.
I was also sceptical, so told him I'd come and ask you knowledgeable folk for a second opinion

Thanks!

[Sarnie]

It's payable, as far as I'm aware.....

[quinny100]

If either of them will own another property at the point of completion, the surcharge is payable. No exceptions. Doesn’t matter if you don’t live in it, doesn’t matter if you've never set foot in it, it’s payable.

[phl]

Yeah. The higher rates will apply. Revenue has pretty clear guidance about it - https://www.gov.uk/guidance/stamp-duty-land-tax-bu...

[GR_TVR]

Thanks all - confirms both of our thoughts on it.

I'll update once it's all sorted!

[NickCQ]

The exemption that seems to cause this confusion is that AFAIK if you sell your main residence and buy another you don’t pay the surcharge even if you own other properties.

In this situation your mate doesn’t have an existing first residence to sell so can’t benefit from this.

[Mortgage_tom]

NickCQ said:

The exemption that seems to cause this confusion is that AFAIK if you sell your main residence and buy another you don’t pay the surcharge even if you own other properties.

In this situation your mate doesn’t have an existing first residence to sell so can’t benefit from this.

That's right.

If someone owns a few buy to lets and their main residence. If they then sell their main residence and then within 3 years (I think) buy a replacement main residence then there is no additional rate to pay. If they purchase a new main residence before selling the old one then they will pay the additional rate , but I think can claim back once previous main residence is sold, again I think within 3 years.

So I can see where the solicitor is coming from. However I'm unsure if you have to pay the additional rate if you own buy to lets but no main residence. But I think in this case as the buy to let is his former main residence he may have to pay the additional rate.

[GR_TVR]

Just to update this - my friend has now moved in and didn't have to pay the additional rate.

Yet...!

[Jobbo]

GR_TVR said:

Just to update this - my friend has now moved in and didn't have to pay the additional rate.

Yet...!

Don't worry, HMRC only have up to 21 years to catch up with him.

Seriously, he needs to be careful here. He seems squarely to have to pay it (it catches anyone buying an additional residence, husband and wife are treated as one for this purpose). So his solicitor appears to be wrong. SDLT is a self-assessment tax so it's up to him to declare it correctly - it's not up to HMRC to decide how much he owes. If his solicitor has got it wrong, it doesn't change the fact that he is liable for the extra and any penalties.