Stamp duty land tax (SDLT) is part of the property buying process. When some buyers pay stamp duty, they may overpay or qualify for an exemption in retrospect, which means they may be eligible for a stamp duty refund.
There is an additional 3% surcharge on top of existing SDLT rates for people with more than one property for example, buy to let property and second homes or a holiday home (excluding caravans, mobile homes or houseboats) and again this may give rise to a refund if mistakes have been made.
This article looks at circumstances where someone has had to pay stamp duty and a stamp duty refund might be granted, the procedure for making a claim, and how to receive a refund from HMRC.
Stamp duty land tax (SDLT) refers to a tax levied by the government on the acquisition of land and properties with a value greater than a certain threshold. The tax is calculated based on the property purchase price.
This tax must be paid to HMRC within 14 days of the completion of the purchase or transfer of the property in England or Northern Ireland.
The rates payable are generally determined by using the land or property, which may be residential, non-residential, or mixed purposes.
There are SDLT reliefs and exemptions which you should also be aware of. Find out more about Stamp duty land tax reliefs and exemptions here.
Buyers can claim SDLT refund if they sell their main residence within three years of completing a new home. The only thing is to know the complete process of how to get HMRC SDLT refund.
The stamp duty rate ranges from 2% to 12% of the purchase price, depending upon the value of the property bought, the purchase date and whether you are a multiple home owner. Anyone purchasing an ’additional’ residential property will be charged a 3% surcharge on each of the threshold bands.
The rules are complex and many people have found that they can claim SDLT refunds from HMRC when rules have been misinterpreted or stamp duty has been miscalculated.
SDLT is paid depending on the property price. You can reclaim overpaid SDLT after the purchase of your property, but there are time limits, and only specific circumstances where you may be eligible, and that can be explained well by SDLT accountants.
The SDLT surcharge paid on a property can be claimed for refund where:
All the above criteria for an SDLT refund must be met.
There are clear guidelines from HMRC around Stamp duty land tax refunds but sometimes, unless you understand tax law, things aren’t always that straightforward.
Here’s a quick summary why buyers may find they are eligible to claim a SDLT refund from HMRC but speak to one of our tax advisors to find out more details:
If you could have paid more stamp duty than you should have due to an inaccuracy with HMRC’s online stamp duty calculator. The calculator wasn’t always accurate and many solicitors were using it for final calculations. So it’s worth double checking now if the SDLT you paid was indeed correct.
You will be eligible for a stamp duty refund on your second home surcharge if you sell your main residence within three years of paying the additional 3%. You can also check a few SDLT relief on second property online or with your tax experts.
If you paid a stamp duty surcharge on a property with an annexe, granny flat, or another smaller building on the grounds of your main home, you might be able to make a SDLT refund claim.
Properties with a self-contained annexe on their grounds are treated as a single home, rather than two different properties, so long as the main building is worth at least two-thirds of the property’s overall value.
If your property falls into this category you may be eligible for a sizable refund. Contact us if your property falls into this category.
There may well be an SDLT exemption for uninhabitable buildings or properties. However, this is a grey area as what HMRC believe is uninhabitable and what the average person considers uninhabitable can be very different.
Dereliction is the word used in the HMRC guidance, and there is a big difference between a derelict property and a dwelling that is essentially habitable but in need of modernisation, renovation or repair. Seek guidance on this matter.
Outbuildings such as barns on the grounds of your property could also reduce your SDLT liability. If this has resulted in an overpayment, then you could be looking at a refund.
If your property has more than 1.3 acres of land attached to it, then mixed use rules could potentially save money in SDLT.
Forestry land is often sold as part of a residential property in the same transaction. This can provide another strong argument for “mixed use” and potential savings on tax due.
HMRC corrected their guidance on SDLT for mixed-use dwellings, stating that the additional 3% SDLT surchargewould not apply to the purchase of mixed-use transactions (mix of dwellings and non-residential property) where SDLT MDR (Multiple Dwellings Relief) is claimed.
Multiple dwellings relief (MDR) could be claimed by a taxpayer when more than one dwelling is acquired in a single transaction or a mixed-used purchase consisting of more than one dwelling. HMRC has backed track on their long standing viewpoint for such transactions.
This change could allow the affected purchasers to claim back their overpaid SDLT from HMRC on transactions related to mixed-use, which involved SDLT multiple dwellings.
You can apply using a HMRC online service or fill in the form on-screen, print it off and post it to HMRC. However, its worth seeking advice from a professional advisor who can look at your SDLT returns and give you specific advice before you use the online service. dns can offer you tax specialist advice in this area.
The information you need to make a claim includes:
The refund can be applied for by amending filed stamp duty return at any time within the period of 12 months beginning with the effective date of the subsequent transaction (transaction involving sale of previous main residence) or, if later, the filing date of the return for newly purchased property. Miss these dates and your refund claim will be invalid.
The refund procedure is fairly straightforward and can be done either online or by post. It’s worth speaking to a tax advisor to get clear advice around your stamp duty payment and whether youll be eligible before making a claim.
The refund is normally processed within 15 days unless HMRC requires additional information.
If your stamp duty claim is not settled within this time, you could be entitled to any interest due on the refund, but you will not be able to file for compensation.
The SDLT rules can be complex, so it’s worth seeking expert guidance to find out if you’re eligible for a refund.
If you need assistance with filing a claim for SDLT refund or you still have the question “how can i get SDLT refund?”, then please contact us
Call us on 03300 886 686 or email on enquiry@dnsaccountants.co.uk.
Any questions? Schedule a call with one of our experts.
Sumit Agarwal Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.
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