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Claiming a refund of the 3% higher rates of SDLT


Nick and Mary bought their current home in Belfast in December 2016. At the date of purchase, they also owned a buy-to-let (BTL) property in their joint names, which had been purchased about a year previously. Therefore, they were required to pay the 3% higher rates of SDLT on the purchase of their Belfast home.

As it is approaching the 3-year anniversary of the purchase of the Belfast property, Nick and Mary have enquired whether it would be possible to make a reclaim for the additional 3% SDLT paid, if they were to transfer the BTL property to a company, in which they own the entire share capital and are directors of.


In order to be eligible to make a reclaim for the 3% surcharge, certain prescribed conditions must be satisfied.

There is a replacement of a main residence if, at the time of a purchase, the transaction was a higher rates transaction and in the subsequent three years, the purchaser (or the purchaser’s spouse or civil partner) disposes of a previous main residence. The previous main residence must have been the main residence of the purchaser at some time during the three years prior to the purchase of the new main residence.

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 (not an exhaustive list):

  • Outright gift to another individual
  • Transfers to a connected company
  • Transfers to a trust

However, and crucially in this case, the property must have been the purchaser’s main residence at some point in the 3 years prior to the purchase of the new property.

As the first property was a BTL and the couple never occupied it, the conditions for the reclaim are not satisfied.

Moreover, the transfer of the property to a connected company would give rise to an SDLT charge on the market value of the property, regardless if no actual consideration was paid or the level of debt transferred. Furthermore, as the property would be transferred to a company, the 3% higher rates would automatically apply.

Therefore, if they proceeded with this course of action, the couple would not be able to make a reclaim of the 3% surcharge paid in December 2016 and would incur additional SDLT on the market value of the BTL at the higher rates.

Needless to say, Nick and Mary did not transfer the BTL to their company.

The rules governing SDLT are becoming increasingly complex. If in doubt, seek professional advice.

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

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