Q It seems that clergy are discriminated against by the rules on higher-rate stamp duty. We do not own our main residence, the vicarage, but have to live in it as an occupational requirement.
We have a small flat which we had for sale to help pay for a retirement house. We have found our retirement home. Due to the coronavirus pandemic we lost the flat seller. A family loan is helping us buy the house, but we will not be able to claim back the higher-rate duty when the flat finally sells, as our main residence is the vicarage and not the flat.
This would also apply to farm managers, teachers in boarding schools and anyone who has to live away from the property they own. The stamp duty rules are based not in what you own but instead on what is your main residence.
A Actually the rules for stamp duty land tax (SDLT) are definitely based on what you own rather than on where you live. The test is the answer to the question: “How many properties do you own at the end of the day of the transaction?” If the answer is one, the higher rates do not apply regardless of what the property is used for. If the answer is two or more, then the higher rates of SDLT do apply. So in your case because you owned both your flat and the house for your retirement at the end of the day you bought the latter, you had to pay the higher rate. This is the case even if the place you buy which causes you to own two or more properties is your new main home.
However, if you sell the main home you moved out of within three years of purchasing the new home, you can apply for a refund of the higher rate of SDLT.
For sales of old homes since 29 October 2018, a refund must be claimed within 12 months of buying the new home or, if later, 12 months of the date on which the SDLT return relating to the new purchase was filed.
And this is what I think you may be feeling hard done by about. Because the flat has not been your main residence at any time, when you come to sell it, you won’t be eligible to a refund of the SDLT on your retirement home. However, if the flat has been your main residence at any time in the three years before buying your house, you could be in line for a refund.
For anyone in a similar situation, selling the property first and then buying would avoid the higher-rate SDLT.