Lots of people pay more Stamp Duty than necessary, thanks to recent rule changes along with the longstanding complexities surrounding property classifications. This has been going on for some time and has been reported on by the press but, annoyingly, it still happens pretty regularly. There are a few reasons for this. The main problem is that it’s usually solicitors who end up in charge of determining how much Stamp Duty Land Tax (SDLT) is due.
This means it’s up to them to correctly classify properties whilst navigating the stupidly complicated rules and, with respect to solicitors, they tend not to be experts on SDLT, or taxation generally. Her Majesty’s Revenue and Customs (HMRC) presumably has a duty to check for overpaid tax, just as they have a duty to check for underpaid tax. However, as many will know, the Revenue is a lot more scrupulous in its efforts to detect underpayments (or perceived underpayments!) than it is in fulfilling its respective duty to acknowledge and rectify over-payments.
If you’re in the process of buying a house or have bought one recently then read on to find out if you’re entitled to stamp duty relief. HM Revenue & Customs (HMRC) has reportedly refunded £127m of stamp duty to second-homeowners since the surcharge was introduced: 6,800 additional property refunds totalling £80m were paid in 2016/17 with a further £47m repaid in Q2 2017. In total, HMRC had to give refunds on 10,700 transactions at an average cost of £11,869 each.
FYI: We recently secured a £10k tax rebate for a friend who’d overpaid on stamp duty so needless to say, it’s always worth a second look…
Stamp Duty Land Tax (SDLT) is a tax on properties bought in England and Northern Ireland. You’ll need to pay it when you buy a residential property that costs more than £125,000. Thanks to complex, home buyers often pay more than they have to and HMRC tends not to notify people when this occurs. See below for a brief rundown of some of the common mistakes that are made which often lead to over payments.
Often, those who purchase houses which have an annexe end up paying more stamp duty than is required. The reason for this is that, under the old rules, ‘granny flats’ would have been classed as two ‘dwellings’ and, as such, would be subject to higher rates of SDLT – a 3% surcharge to be precise. However, since the rules were updated in 2018, properties with an annexe can be classed as one dwelling so long as the annexe is not worth more than a third of the value of the entire house and is within the main grounds of the property. This can make quite a difference.
For this to be the case, the property must tick the following two boxes:
For the surcharge not to be due, the property might be the buyer’s only property, or he might be replacing an only or main residence by moving into the more valuable of the two dwellings being bought. If you’re still unclear, feel free to give us a ring on 0203 326 0133.
The good news for those who’ve overpaid is that they can claim a refund on these charges within three years! Although, it’s advisable to contact the Revenue within 12 months if possible otherwise they can make things difficult, apparently. We can help with this as our team of consultants has spent untold hours dealing with HMRC…
The tax is different if the property or land is in:
You get a discount (relief) that means you pay less or no tax if:
You pay the tax when you:
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