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Markel Tax

26 Nov 2018

Significance of 26 November 2018 for the 3% SDLT charge

The additional 3% SDLT applies where Conditions A to D of para 3 of FA03 Sch 4ZA are met. 

Condition D of the legislation is met where the additional property does not replace a main residence i.e. there may be an exception from the 3% charge where the new property is or becomes a replacement for the main residence.

The criteria for the replacement rules are changing for purchases on or after 26 November 2018 where the purchase and sale are not on the same day.

Purchases before 26 November 2018: where the old main residence is disposed of at any time prior to acquiring the new main residence, it is treated (under the transitional rules) as a replacement of the main residence. This means there is no 3% charge as long as the individual lived in the original property as their main residence at some point in their ownership period.

Purchases on or after 26 November 2018: to qualify as replacing the main residence, the old main residence must be sold within three years of purchasing the new main residence. Additionally the purchaser must have lived in the old property as their main residence in the three years prior to buying the new main residence. This means that anyone who has not lived in the old property as their main residence from 26 November 2015 onwards, or who sold their main residence before that date and buys the new main residence after 26 November 2018 will pay the additional 3% and will not be able to claim it back.

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