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Warning lockdown could affect stamp duty refunds

Warning lockdown could affect stamp duty refunds

Tax experts have warned the coronavirus lockdown could land homebuyers in trouble as they may miss out on stamp duty refunds from second homes.

The problem centres on the rules around the 3 per cent stamp duty surcharge on second homes.

Taxpayers who sell or give away their previous main home within three years of buying a new one can apply for a refund of the higher rate.

However, Chris Etherington, partner at tax consultancy RSM, warned the current lockdown could see people struggle to sell their old home in time to meet the deadline.

This comes after data from Zoopla showed the coronavirus lockdown has already stalled 373,000 property purchases worth £82bn.

Mr Etherington said: “With the property market grinding to a halt and more than 370,000 transactions reportedly on hold, a sizeable SDLT cost may be looming for the self-builders, ‘grand designers’ and couples who have moved in together, as the lockdown means they are running out of time to reclaim the tax previously paid.

"We call on the government to relax the rules.”

A spokesperson for HMRC told FTAdviser the rules have not been revised, and that any decision on changes would be made by the Treasury.

Fall in non-residential receipts

The latest quarterly SDLT data from HMRC, out today (April 30), showed a drop of 25 per cent (£236m) in non-residential receipts, while residential receipts rose by 6 per cent (£106m) compared with Q1 2019.

Zena Hanks, partner at Saffery Champness, said the “somewhat rosy picture in today’s statistics should be looked at cautiously, reflecting as they do decisions made last year before the current crisis hit. The litmus test for the pandemic’s impact on property deals will likely be in the Q2 receipts.”

Ms Hanks added that the effect of the coronavirus on business had “already begun to ripple through to tax receipts, with many businesses putting their plans on ice and not moving ahead with property deals.

“Home buyers on the other hand seem to have been determined to complete in Q1, perhaps spurred on to get their affairs in order before the implementation of a long drawn out lockdown," she said.

Ms Hanks said a fall in SDLT receipts would come “at a time when the Treasury needs tax receipts more than ever to help soak up the cost of the government’s coronavirus support packages.”

chloe.cheung@ft.com