HMRC SDLT: SDLTM09807 – SDLT – Higher rates for additional dwellings: Condition D – exceptional circumstances

This section of the HMRC internal manual provides guidance on chargeable consideration, a key concept in UK tax law. It outlines the principles and concepts involved in determining the chargeable consideration for transactions subject to Stamp Duty Land Tax (SDLT).

SDLT – Higher Rates for Additional Dwellings: Condition D – Exceptional Circumstances

Introduction

When someone buys a home in the UK, they often pay Stamp Duty Land Tax (SDLT) at a higher rate if they also own another property. However, some people may be eligible for a refund under specific circumstances if they fail to sell their previous main home within the usual three-year time limit. This article explains what constitutes ‘exceptional circumstances’ and how you can seek a refund.

What Are Exceptional Circumstances?

Generally, the three-year period for selling your previous main residence is sufficient for most people. However, unexpected events can occur that make it challenging to sell the property within this time frame. The circumstances must meet specific criteria to be considered exceptional.

Key Requirements

To qualify for an extension of the three-year period due to exceptional circumstances, HMRC needs to be convinced that:

– You were unable to sell your previous main residence within the three-year time limit due to circumstances that you could not have reasonably anticipated.
– You made efforts to sell your previous home as soon as you could after those circumstances ended.

It’s important to note that your previous home must be sold before HMRC can evaluate whether your situation may qualify as exceptional. There is no option to get clearance from HMRC before this transaction occurs.

Understanding What Counts as Exceptional Circumstances

Exceptional circumstances are rare and usually involve situations that affect larger groups of people, rather than just individual buyers. Below are some examples of circumstances that may be considered exceptional:

– Government-imposed restrictions that prevent the sale of the property.
– Actions taken by a public authority that block the sale.

On the other hand, some situations will not qualify as exceptional circumstances. These include:

– Changes in intentions from any party involved in the transaction at a late stage, such as a buyer pulling out.
– Having insufficient funds to proceed with a sale.
– Deciding against a sale due to market conditions, such as waiting for the price to rise.
– The collapse of a property chain.

Important Considerations

Even if exceptional circumstances exist, HMRC must be assured that these genuinely prevented the sale of your previous home within the three-year period. Factors influencing HMRC’s decisions include:

– If you took reasonable steps to sell your property during the typical three years.
– Whether the exceptional circumstances ended well before the three-year limit.

How to Request a Refund

If you believe you have experienced exceptional circumstances, you should apply for a refund only after selling your previous home. When contacting HMRC, ensure to provide clear information, including:

– A detailed account of the exceptional circumstances you faced.
– An explanation of how these circumstances prevented the sale of your previous home.
– Reasons why you could not have foreseen these issues.
– Evidence demonstrating that you sold your previous home as soon as you could after the circumstances changed.

It’s crucial to wait until you’ve sold your previous residence before you reach out to HMRC. At that point, HMRC can assess all pertinent facts related to your situation. They may ask for additional information to help make a decision about extending the three-year time limit.

HMRC’s Discretion

It is up to HMRC’s discretion to grant a refund based on exceptional circumstances. If they determine that your situation does not qualify, they will not extend the usual time limit, and there is no right to appeal their decision.

Examples of Exceptional Circumstances

To illustrate how exceptional circumstances work, here are a few examples:

Example 1

Mrs C bought her new home on 31 July 2017. She sold her previous home on 1 September 2023, which is more than three years after buying her new residence. Mrs C claims she was waiting for the property market to improve to get a better sale price.

In this case, because Mrs C did not sell her old home as soon as she reasonably could have after purchasing the new one, her situation does not qualify as exceptional. Consequently, she will not be eligible for a refund on the higher rates she paid when buying the new home.

Example 2

Mr and Mrs F bought an apartment in early 2017. As their family grew, they decided to upsize. When they tried to sell their flat, they discovered it had external cladding, which needed remedial work before they could obtain the necessary EWS1 certificate to sell it. Still wanting to buy a new home, they purchased one in January 2020 and paid the higher rates.

Due to the demand for the work, the remediation was completed in April 2024, and it took an additional five months to receive the EWS1 certificate. As soon as they received the certificate, Mr and Mrs F listed their flat for sale and sold it in October 2024. They requested a refund from HMRC, citing the delays as exceptional circumstances.

In this case, HMRC determined that Mr and Mrs F are eligible for a refund. The unexpected delays regarding the required repairs and paperwork before they could sell their property affected their ability to complete the sale within the standard three-year timeframe.

Example 3

Ms G was living with her parents when she learned about the cladding issues associated with flats. She opted to purchase one at a lower price due to the need for remedial work. When she completed her flat purchase in May 2021, it became her main residence. After a while, Ms G decided she preferred living in a house and purchased one in January 2022, paying the higher rates.

When she attempted to sell her flat, she found she couldn’t attract a buyer until the remediation work was completed and the flat passed the EWS1 survey. The necessary repairs were not finished until September 2025, and she sold the flat in January 2026.

Despite claiming exceptional circumstances, HMRC concluded that Ms G was aware of the cladding issue and needed repairs when she bought the flat. Since she could have reasonably anticipated needing to complete work on the flat before selling, she isn’t eligible for a refund on the higher rates.

Final Notes

It’s important to understand that HMRC’s assessment of exceptional circumstances is based on evidence and facts. This means that each case is evaluated individually based on specific details. If you find yourself in a situation where you think you might qualify for a refund, ensure you collect all required documentation and information to support your claim effectively.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM09807 – SDLT – Higher rates for additional dwellings: Condition D – exceptional circumstances

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