Since 1 April 2016 a supplement of 3% SDLT has applied to purchases of second and additional homes in England, Wales and Northern Ireland. This supplement was copied in Scotland and became the additional dwelling supplement (ADS) for LBTT, also set at 3% of the entire consideration for properties costing £40,000 or more. A similar 3% supplement applies to LTT in Wales from 1 April 2018.
However, the rules for the SDLT supplement and the ADS for LBTT do not mirror each other, as there are different conditions for relief from the 3% supplement in each country.
Scotland has just amended its law to provide relief from ADS where a couple buy a home together to replace their main home, but their former home was held the sole name of one of the individuals. Taxpayers who fall into this category, and who purchased the replacement home on or after 1 April 2016, can now apply for a refund of the additional LBTT paid.
There are a number of circumstances in which refunds of the SLDT supplement can be reclaimed as set out in the SDLT manual under condition D. Unfortunately, the SDLT manual is not written in plain English and the convoluted conditions and exceptions are difficult to follow. Our SDLT experts can help your clients with questions in this area.
It is worth checking if a refund of the SDLT supplement is due, as it must be claimed within 3 months of the sale of the previous main residence or within 12 months of the filing date of the land transaction return, whichever comes later. Another point to check is whether the property acquired is 100% residential, as the supplement only applies to residential property.
Written by the Tax Advice Network