Can you reclaim the higher rates of SDLT if you transfer your old home to a company within 3 years?

Introduction

Many buyers pay the higher rates of Stamp Duty Land Tax (SDLT) when they buy a new home before getting rid of their old one. A common follow-up question is whether that extra SDLT can later be reclaimed if the former home is disposed of within the allowed time limit.

This issue often arises where the old property is not sold on the open market but is instead transferred in some other way, such as into a company. The key point is whether that transfer counts as a disposal of the former main residence for the purposes of the refund rules.

The Question

A homeowner bought a new main residence in June 2022 while still owning their previous home, so the higher rates of SDLT were paid on the new purchase. The previous home had been their main residence before the move. They are still within three years of the new purchase and are considering transferring the former home to a company rather than selling it to an unrelated third party.

The question is whether that transfer could allow a refund of the higher rates paid on the new home, and whether there are any wider tax issues to consider, including Capital Gains Tax and possible incorporation relief.

Nick’s Explanation

Nick’s core view was that a refund may be available if the former main residence is disposed of within three years of buying the replacement home.

In anonymised form, his explanation was:

“If you purchased your current main residence while still owning your previous main home, you would have been charged the additional SDLT surcharge. However, you may be eligible for a refund, but only if specific conditions are met. The key condition is that your former main residence must be disposed of within three years of the purchase of your new main residence.”

He also noted that disposal will usually mean a sale, but that a transfer of ownership can also potentially qualify if the former property is no longer held in the individual’s own name.

That is the right starting point for the SDLT refund analysis. However, the wider tax position needs careful handling. A transfer to a connected company is not simply ignored for tax purposes, and separate SDLT and Capital Gains Tax consequences can arise on that transfer.

The Law

The higher rates of SDLT for additional dwellings are contained in Schedule 4ZA to the Finance Act 2003.

Where an individual buys a dwelling and, at the end of the day of purchase, still has a major interest in another dwelling, the higher rates can apply unless a specific exception is met.

One important exception concerns a replacement of a main residence. Broadly, if the buyer has not yet disposed of their previous only or main residence by the time they buy the new one, the higher rates may still be charged up front, but a refund can later be claimed if the previous main residence is disposed of within the permitted period.

The legislation looks at whether:

• the purchased dwelling is intended to be the buyer’s only or main residence, and
• the buyer disposes of a major interest in a former only or main residence within the relevant time limit.

In most standard cases, the former main residence must be disposed of within three years after the purchase of the new main residence for a refund claim to succeed.

A disposal for these purposes is not limited to an arm’s length sale on the open market. A transfer of a major interest can amount to a disposal. But the exact legal and tax effect of the transaction still matters.

If the old property is transferred to a company connected with the owners, the company acquisition may itself be chargeable to SDLT, often by reference to market value rules. Separate Capital Gains Tax rules may also apply, again often using market value where the transaction is between connected parties.

If a reader is also considering whether a property was “uninhabitable” or “not suitable for use” at purchase, it is important to note that the threshold is now relatively high following Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799.

Analysis

The SDLT refund question can be worked through in stages.

First, if the buyers purchased the new home while still owning the old one, the higher rates were likely charged correctly at the time of purchase. That is the normal starting position.

Second, if the old property had genuinely been the buyers’ previous only or main residence, it can potentially satisfy the “former main residence” requirement. Occupation history matters here. If the old home was actually lived in as the main home before the move to the new property, that supports the refund claim.

Third, the timing is critical. The former main residence must be disposed of within three years of the purchase of the replacement home. If the new home was bought on 30 June 2022, the disposal of the former home would generally need to occur by 30 June 2025.

Fourth, a transfer to a company can, in principle, amount to a disposal of the former main residence. If the individual owners cease to hold the major interest personally and the company becomes the owner, that is capable of being a disposal for the Schedule 4ZA refund rules.

Fifth, the fact that the old and new homes are jointly owned does not prevent the refund analysis, but the ownership structure must be reviewed carefully. The higher rates and refund provisions are highly fact-sensitive, especially where spouses or civil partners are involved, because the rules often aggregate their positions.

Sixth, the transfer to the company creates a separate tax event. That means there are really two different SDLT questions:

• whether the original higher rates paid on the new home can be refunded, and
• what SDLT, if any, the company must pay when it acquires the old property.

Seventh, there is also a separate Capital Gains Tax question. Nick suggested there might be no gain because the property would be taken at market value for SDLT purposes. That is too broad as a statement. SDLT market value treatment and Capital Gains Tax treatment are related only in the sense that both regimes may use market value in connected-party transactions; they do not cancel each other out.

If individuals transfer a property to their own company, Capital Gains Tax is usually considered by reference to market value, not the actual consideration paid. That means a chargeable gain can arise if the market value exceeds the owners’ base cost, subject to any available reliefs.

Eighth, principal private residence relief may reduce or eliminate some or all of the gain if the property was the owners’ only or main residence for the relevant period. But that depends on the detailed occupation history, periods of ownership, periods of letting if any, and the exact timing of disposal.

Ninth, incorporation relief under section 162 of the Taxation of Chargeable Gains Act 1992 is not automatically available just because a property is transferred into a company. It usually requires a genuine business to be transferred as a going concern, together with its assets, in exchange wholly or partly for shares. For property owners, the main issue is often whether what they are doing amounts to an investment activity or a business for section 162 purposes. That can be a difficult factual question.

So, on the SDLT refund point alone, the proposal may work if the former main residence is disposed of in time and the other replacement-of-main-residence conditions are met. But that does not mean the wider tax result is automatically favourable.

Outcome

A transfer of the former main residence to a company can potentially count as a disposal for SDLT refund purposes. If the old home was genuinely the previous main residence and the transfer takes place within three years of buying the new home, a refund of the higher rates paid on the new home may be available.

However, that does not end the matter. The transfer to the company is a separate transaction that may trigger SDLT for the company and Capital Gains Tax for the individual owners. Any claim that there is “no gain” needs proper review and should not be assumed.

Practical Steps

If you are assessing a similar case, the sensible steps are:

• confirm the exact completion date of the new home purchase;
• confirm whether the old property was genuinely your only or main residence before the move;
• check whether the old property will be disposed of within three years of the new purchase;
• establish exactly how the transfer will be structured and who owns the company;
• review the SDLT position on the company acquisition separately from the refund claim;
• calculate any possible Capital Gains Tax exposure using market value principles where relevant;
• consider whether principal private residence relief applies in full or in part;
• take specific advice before relying on section 162 incorporation relief, because it is not available in every property transfer-to-company case;
• submit any SDLT refund claim within HMRC’s time limits and with the correct transaction details.

For many taxpayers, the SDLT refund point is relatively straightforward, but the transfer-to-company consequences are where the real complexity begins.

Conclusion

If you bought a new main residence, paid the higher rates because you still owned your old home, and then dispose of that former main residence within three years, a refund may be available. A transfer to a company can potentially count as that disposal. But the transfer itself may create fresh SDLT and Capital Gains Tax issues, so the whole arrangement should be reviewed as one connected tax plan rather than as an SDLT refund issue in isolation.

Legal References Used

• Finance Act 2003, Schedule 4ZA
• Taxation of Chargeable Gains Act 1992, section 162
• Amarjeet and Tajinder Mudan v The Commissioners for HMRC [2025] EWCA Civ 799
• HMRC guidance on refunds of the higher rates of SDLT

This page was last updated on 22 March 2026.

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