The Daily Telegraph - Saturday - Money
You’ll get your stamp duty refund after all, Government tells those who can’t sell up
Homeowners stuck in a tax trap because of the Covid-19 pandemic have been offered a reprieve by the Government after Telegraph Money highlighted the problem.
HM Revenue & Customs has pushed back the deadline for additional stamp duty refunds for house sales that were delayed by the outbreak.
The extension will be particularly welcomed by people who had built a new home for themselves before selling their old one. One couple from West Yorkshire told this newspaper they spent three years building their dream house and faced an extra stamp duty bill of £40,000 if they could not sell their old property by June.
The tax trap was inadvertently created by the lockdown. In April 2016 the Government introduced a three percentage point stamp duty surcharge on homes bought in addition to a main residence. Buyers could apply for a refund of the extra tax paid on the second property if they sold their old home within three years and the new home became their primary residence.
When the Government froze the housing market on March 27, this refund regime was thrown into chaos. Buyers were forced to delay sales unless they were legally bound to proceed.
Now, anyone whose three-year deadline fell from January 2020 onwards will be granted an extension if they write to HMRC to explain how the pandemic delayed the sale. Extensions will also be granted if a public authority has taken action that delayed the sale.
Although the market reopened on May 13, many transactions cannot be picked up where they left off.
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According to a survey by Zoopla, the property website, 41pc of buyers are shelving their plans over the new uncertainty. Even transactions that can still go ahead will face delays as surveyors and valuers grapple with a seven-week backlog.
Laura Suter of A J Bell, an investment shop, said: “Considering the extraordinary circumstances and the unprecedented impact on the housing market, it’s sensible that the Government has given these homeowners some breathing space to sell their homes.”
However, the guidance on what constitutes a valid reason for an extension is vague. There are no explicit notes on what the Government will consider to be a delay caused by the virus. Ms Suter said: “This could leave the door open to confusion. Hopefully more clarity will come from the Government on this.”