Stamp Duty Refunds – Could you be entitled to a refund?

Stamp Duty Refunds – could you be entitled to a refund?

Stamp Duty Land Tax  (SDLT) is often paid on property purchases with the amount paid calculated upon the purchase circumstances at the time and the prevailing SDLT scheme.

SDLT payments that would be made on a purchase currently, can be checked by using the SDLT calculator available on the Government webpages https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro

While SDLT has a standard rate, additional surcharges are applied when the property being purchased is a buy-to-let property or a second home worth £40,000 or more.

Sometimes circumstances change after the SDLT has been paid which means that a refund of the SDLT paid can be applied for.

One example of when a refund may be due is when a  new main residence is purchased, but the current residence has not been sold and it is then classed as a  ‘second home.’

This can happen for a few unplanned reasons but the most common is when a buyer of a property drops out and the sellers do not wish to lose the property they have found and still find it possible to still go ahead with their planned purchase.  This means that they own two properties at the same time, but once the former main residence sells a refund is due from the taxman.

Another common reason is when there is a divorce and one of the parties purchases a new home before the marital home is sold.   The marital home may be sold as part of the divorce proceedings  and regardless of those proceedings the marital home will be treated as a ‘second home’ for the purposes of SDLT.   Once the former marital home sells a refund may be due to one or both parties.

There are a few other reasons why an SDLT refund may be owed, but these are rarer and owed in specific circumstances. These include but are not limited to:

  • Buying a property before 28th October 2018 with an annexe.
  • Buying a property that was uninhabitable on purchase.
  • General miscalculation of Stamp Duty.

For properties sold on or after 28th October 2018, a claim can be made within a year of your SDLT return for the new residence being filed with HMRC or within 12 months of your completion date of the former main residence, whichever is later.

Applying for a Stamp Duty Refund can be simple and is done via an online form but the form does require a lot of information about the property transactions involved, including the exact amounts of SDLT paid on the second property, your SDLT unique transaction reference numbers, effective date of sale and more, and it can prove difficult to handle alone. If the refund does not involve a sale of a former main residence and is being claimed for one of the rarer reasons the questions may be more complicated – but we are here to help.

At Hannays, we have assisted many clients make their Stamp Duty Reclaim applications and as a result secured the refunds owed.

If we do not hold the information already we will ask for your documents and information and will manage the rest of the procedure, making what can be a complicated process straightforward for a reasonable price.

If you have any questions regarding the contents of this article or believe you may be entitled to overpaid Stamp Duty and want some advice, please do not hesitate to contact us by telephone on the number 0191 4555361 and ask for Gavin Coates or email  us at info@hannayslaw.co.uk