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SDLT briefing - May 2018

SDLT update - 6 month countdown to save your clients SDLT

26 November 2018 is a key date for the purposes of the 3% surcharge and is now only 6 months away.


The higher rates of SDLT are intended to apply to purchases of additional residential properties, such as second homes and buy-to-let properties. The legislation is complex but one of the most important conditions requiring the replacement of a main residence can provide homebuyers with a ‘free pass’ from the application of the 3% surcharge. This exception can still apply where the purchaser has another property, or even a portfolio of other properties. 

This update covers the scenario where an individual sells their old home before (perhaps a long time before) or at the same time as buying their new home, but has interests in other properties that would mean that the 3% surcharge could be due.

It’s an area that perhaps causes confusion, but it can save buyers from paying the surcharge in unexpected situations.

The main legislation (for purchases on or after 26 November 2018) provides for two 3-year tests, being that a main residence must be sold within 3 years of purchasing a new main residence AND the purchaser must have lived in the old property in the 3 years prior to the purchase of the new property.

However, for property purchases on or before 26 November 2018, there are special ‘grand-fathering’ provisions. These apply where a main residence has been disposed of at any time prior to the purchase of the new main residence AND the individual lived in that property at some point during ownership.

The sold dwelling need not be in the UK, but could be anywhere in the world.

Download flowchart (PDF format)


So, even if previous main residence was sold many years ago, it could be available now to help gain the benefit of the replacement main residence exemption. However, this generous rule will only be in place for another few months, until 26 November 2018. After that date, a homebuyer can only claim this exemption if they sold the old main residence within 3 years of the new purchase and they lived in that property at some point during those 3 years.

It is important to note that the disposal of the old main residence need not be by way of an open market sale, but could be by reason of any of the following:

  • Outright gift to another individual
  • Transfers to a connected company
  • Transfers to a trust
  • Transfer on a divorce

In addition, the exception could apply if the individual’s spouse or civil partner has disposed of a property which the individual once lived in by any of the means listed above.


If you have any queries around SDLT please do not hesitate to get in contact via our SDLT Advisory Service.