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3% higher rates & replacement main residence relief

Does the 3% higher SDLT rate apply to your clients?

Paul and Fiona own a flat in Scotland, which for many years was their only main residence. They decided to relocate to London in 2010 and have been renting property there ever since; during which period the Scottish property has been rented out. The couple also own a holiday home in Spain.

Paul and Fiona now want to relocate to Northern Ireland and purchase a property there. They intend to sell their flat in Scotland, but this is unlikely to be agreed before the purchase of the Northern Ireland property.

Over a few beers in the pub, Paul was advised that if he and Fiona sell their Scottish property within 3 years of buying the new property they would be able to claim a refund for the 3% higher rates paid at the time of purchasing the Northern Ireland property.


  • Paul is correct that there is an exemption to the 3% surcharge if the new property acquisition is or becomes a replacement main residence.
  • If it becomes a replacement main residence, a refund can be claimed in respect of the additional SDLT paid at the date of the purchase of the new property.
  • If there is a replacement of a main residence, then the 3% surcharge will not apply, even if they retain their holiday home in Spain.
  • The Northern Ireland property will become a replacement main residence if:
    • ­ It is intended to be Paul and Fiona’s main residence; and
    • ­ In the 3 years following this purchase, Paul and Fiona dispose of another dwelling; and
    • ­ The old property being disposed of must have been occupied as Paul and Fiona’s main residence in the 3 years before purchasing the Northern Ireland property.

The verdict:

Paul and Fiona have not lived in the Scottish property since 2010 and therefore the 3-year occupation requirement will not have been met.

Accordingly, Paul and Fiona will be subject to the 3% surcharge on the purchase of the Northern Ireland property and will not be eligible to claim a refund, even if their Scottish property is sold within 3 years.

Perversely, if the Scottish property is sold before the purchase of the Northern Ireland property, the 3% surcharge would not be payable under the grand-fathering provisions (see case study 2).

If you have any queries around SDLT please do not hesitate to get in contact via our SDLT Advisory Service.

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