If at the time when you own a dwelling you purchase (for more than £40,000) another dwelling, you are charged a higher rate of Stamp Duty Land Tax (SDLT). You get the additional tax back if the new property is to be a replacement for your main home and you dispose of your old home within a specified period of buying the new one. We commented in an article last year on some of the quirks that the rule throws up for married or unmarried couples.
Similar rules apply in Scotland, albeit that the legislation, terminology, specified period and rate of tax are all different (and less favourable) than in England and Wales. And, of course, land law in Scotland is different too: usually buyer and seller do not themselves sign and exchange contracts – instead their respective solicitors effect the bargain by ‘concluding missives’.
The law in England and Wales is clear: you can claim repayment only if the ‘effective date’ of your sale is within the period of three years beginning with the day after the ‘effective date’ of your purchase. ‘Effective date’ means the date the transaction is completed.
The phraseology in Scotland is different and less clear. It requires that the buyer ‘disposes of’ the old property within the 18-month period beginning with the day after the ‘effective date’ of the sale. That led to the First-tier Tribunal (‘FTT’) case of Tavendale [2023] FTSTC 1.
Mr Tavendale paid the Scottish ‘Additional Dwelling Supplement’ on buying his house on 26 February 2021, meaning that to get it back he would need to ‘dispose of’ the old house by 27 August 2022. He claimed repayment on the grounds that his solicitor had issued a ‘qualified acceptance’ letter to the buyer’s solicitor on 23 August. Revenue Scotland declined to make repayment. The FTT agreed: ‘disposal’ did not take place until the ‘date of entry’ (the Scottish equivalent of English law ‘completion’) of 29 September – too late for repayment. Qualified acceptance was not even a concluded bargain for disposal, let alone an actual disposal.
So, reassuringly, the rules are, at least in this regard, the same in Scotland as in England and Wales. It’s a pity they didn’t just replicate the legislation exactly and save us the trouble of wondering…
For more information, please get in touch with your usual BKL contact or use our enquiry form.