Stamp Duty Refund

How the stamp duty surcharge refund works

What is the additional dwelling surcharge?

Since April 2016, anyone buying a residential property in England or Northern Ireland who already owns another property must pay an extra 5% Stamp Duty Land Tax on top of the standard rates — on every band, including the 0% band. This means there's no tax-free threshold at all: you pay 5% from the very first pound.

The surcharge applies to anyone who, at the end of the day of completion, owns two or more residential properties. It covers second homes, buy-to-let purchases, and — critically — people who are moving home but haven't yet sold their old property.

Why do movers pay it?

The surcharge was intended to apply to investors and second-home buyers. But it also catches people who are simply slow to sell their previous home — perhaps because of a chain delay, a difficult market, or an overlapping purchase. In these cases, you complete on the new property while still technically owning the old one, triggering the surcharge automatically.

For a £350,000 purchase, the surcharge amounts to £17,500 — a significant sum that catches many buyers by surprise.

The 36-month reclaim rule

HMRC allows a full refund of the surcharge if you sell your previous main residence within 36 months of buying the new one. The 36 months is measured from the completion date of the new purchase — not the exchange date, not the date you moved in.

The refund is always the full surcharge amount: 5% of the purchase price (since the surcharge is a flat 5% across all bands). You cannot claim a partial refund.

Note: if you sold the previous home before buying the new one, you wouldn't have paid the surcharge in the first place. The refund mechanism only matters when the old home sells after the new purchase completes.

How to claim the refund

You claim by amending your original SDLT return. You can do this:

• Online: via HMRC's SDLT amendment service. You'll need your UTRN (Unique Transaction Reference Number), which appears on the SDLT5 certificate you received at completion.
• By post: using HMRC form SDLT1 with an amendment request letter. This is slower and only necessary if the online system can't process your case.
• Via your conveyancer: your original solicitor can file the amendment and usually holds the UTRN. This is often the easiest route.

Refunds are typically processed within 15 working days of HMRC receiving the claim. HMRC may ask for evidence that the previous home has been sold (usually the completion statement).

What happens if you miss the 36-month deadline?

Generally, you cannot claim after 36 months. HMRC's guidance is clear that the window is fixed. However, in exceptional circumstances — such as where the delay in selling the old property was caused by factors genuinely outside your control (e.g. a legal dispute, a bereavement complication, or a fire) — HMRC may consider a late claim. This requires a formal application with detailed written explanation and supporting evidence. There is no guarantee of success, and specialist tax advice is strongly recommended if you believe you have grounds for a late claim.

Common edge cases

• Divorce / separation: if a court order has transferred one property, you may not be treated as owning two properties at the time of purchase. The rules here are complex — seek advice from a family law solicitor and tax adviser working together.
• Inherited property: if you inherit a share in a property, this counts towards your "owned properties" total. The surcharge can apply even on a small inherited share. If you sell the inherited property within 36 months of a later main-home purchase, the same reclaim rules apply.
• Overseas property: SDLT counts residential property you own anywhere in the world, not just in the UK. An overseas home (holiday apartment, inherited family property) will trigger the surcharge. Note: you cannot reclaim the surcharge by selling a foreign property — the reclaim only works by selling a UK property that was your previous main home.
• Gifted property: if a property was gifted to you, the market value at the date of the gift is treated as the acquisition price for SDLT purposes. Whether the surcharge and reclaim rules apply depends on timing and your specific circumstances.
• Scotland and Wales: the Scottish ADS (Additional Dwelling Supplement) and Welsh LTT higher rates have different rules and different reclaim windows — currently 18 months in Scotland and 36 months in Wales (but confirm current rules as these change).

Is there a minimum property value for the surcharge?

Yes. The additional dwelling surcharge only applies to properties bought for £40,000 or more. Below that threshold, no surcharge is charged and there is nothing to reclaim.