SDLT surcharge refund: why who sells your old home matters in 2026
When you buy a home while you already own another, England and Northern Ireland charge a 5% Stamp Duty Land Tax (SDLT) surcharge on top of the standard rates. On a £300,000 purchase that is an extra £15,000; at £500,000 it is £25,000. The surcharge is not always permanent — buyers who are genuinely replacing their main residence can avoid it or reclaim it. But the relief turns on a single technical point that is easy to overlook: the previous home must be sold by you, not by a company or trust that holds it.
This guide explains how the replacement-of-main-residence rule works, what it is worth, and why the legal owner of your former home matters. It is general information, not advice.
What the surcharge costs
The higher rates for additional dwellings add five percentage points to every standard SDLT band. They apply to most purchases of a second home, a buy-to-let, or any additional residential property worth £40,000 or more (HMRC, 2026).
| Portion of price | Standard rate | With 5% surcharge |
|---|---|---|
| Up to £125,000 | 0% | 5% |
| £125,001–£250,000 | 2% | 7% |
| £250,001–£925,000 | 5% | 10% |
| £925,001–£1,500,000 | 10% | 15% |
| Above £1,500,000 | 12% | 17% |
Because the surcharge is a flat five points across every band, it works out at 5% of the whole purchase price. That is the exact amount at stake when the replacement rule applies — and the amount lost if it does not.
| Purchase price | Standard SDLT | 5% surcharge | Total with surcharge |
|---|---|---|---|
| £285,000 (England & Wales median, 2025) | £4,250 | £14,250 | £18,500 |
| £300,000 | £5,000 | £15,000 | £20,000 |
| £350,000 | £7,500 | £17,500 | £25,000 |
| £500,000 | £15,000 | £25,000 | £40,000 |
| £750,000 | £27,500 | £37,500 | £65,000 |
Figures are England & Northern Ireland SDLT, calculated on the rates in force in 2026. The typical home in England and Wales changed hands for £285,000 across 879,402 Land Registry transactions recorded for 2025 — so a buyer adding a property at that price would face a surcharge of £14,250. You can run any price through the Homecost stamp duty calculator with the additional-property flag set. Scotland (LBTT) and Wales (LTT) operate their own surcharges and thresholds — see our SDLT, LBTT and LTT cross-regime comparison.
The replacement-of-main-residence rule
The surcharge is designed to fall on people adding to their housing, not on people moving from one main home to another. So the law carves out replacements (Finance Act 2003, Schedule 4ZA). There are two timing routes:
- Sell first, then buy. If you dispose of your previous main residence on or before the day you complete on the new one, the purchase is treated as a straight replacement and the higher rates do not apply at all.
- Buy first, then sell. If you complete on the new home before selling the old one, you pay the surcharge upfront. You can then reclaim it if you sell your previous main residence within 36 months of the new purchase. The repayment claim itself must be made within 12 months of selling the old home, or within 12 months of the filing date of the SDLT return, whichever is later (HMRC, 2026).
In both routes the principle is the same: there must be a disposal of your former only or main residence by you — or by your spouse or civil partner, who are treated as one unit for these rules.
Why the legal owner of your old home matters
This is where structure quietly decides the outcome. The replacement test asks whether the buyer disposed of their former main residence. A sale made by a separate legal person is not a disposal by the buyer.
- A limited company is a separate legal entity. If your former home is owned by a company — even a company you control — then when that company sells the property, the seller is the company, not you. There is no personal disposal to satisfy the replacement test.
- A discretionary trust holds property through its trustees for a class of beneficiaries. A sale by the trustees is a disposal by the trust, not by you in your personal capacity, so it does not meet the test either.
The practical effect is that moving a previous main residence into a company or a discretionary trust before completing on a new home can sever the personal-disposal link the relief depends on. The eventual sale happens — but it is the wrong person selling, so neither the up-front exemption nor the 36-month refund route is available, and the 5% surcharge sticks.
Bare trusts and nominee arrangements are treated differently. For SDLT, a bare trust is generally looked through: the beneficiary is treated as owning the property, so a disposal can still be the beneficiary's own. The distinction between a bare trust and a discretionary trust is therefore decisive here — we cover it in how trustees, nominees and bare trusts are treated for SDLT.
Common situations where this surfaces
The trap is rarely deliberate. It tends to appear when someone has restructured their affairs for an unrelated reason and only later buys a new main home:
- A landlord who incorporated a portfolio and folded their own former home into the company along with the rentals.
- A family that placed a home into a discretionary trust for estate-planning reasons, then later wants to buy a replacement main residence.
- An owner who transferred a property to a family investment company before moving.
In each case the home still gets sold, and the family may still feel they have "moved house" — but the SDLT replacement test looks only at who held and disposed of the legal interest.
What the surcharge is worth getting right
At the England and Wales median price the surcharge is £14,250; on a £500,000 home it is £25,000. Those are the sums that hinge on the ownership question above. The interaction between property structures, SDLT and the replacement test is genuinely technical, and the right answer depends on the exact facts, dates and documents in each case. Speak to a qualified adviser before acting — particularly before moving any main residence into a company or trust ahead of a purchase, as doing so can change your SDLT position.
See it for your own numbers
To see the all-in cost of a property — mortgage at the current Bank of England quoted rate, council tax, energy and stamp duty for your situation — search a postcode on Homecost. For a worked example, try Manchester's M1 1AE, or read our companion guides on the additional-property stamp duty surcharge and the surcharge refund route explained.
Based on 879,402 England and Wales Land Registry transactions recorded for 2025 and HMRC's published SDLT rates, accessed 24 June 2026. More cost-intelligence guides are in the Homecost blog. This is general information, not tax or legal advice.