Stamp Duty tax refunds

Simon Misiewicz

Simon Misiewicz

Expat & Property Tax Specialist

9th June 2022

Stamp Duty tax refunds - 3% Stamp Duty on second homes

Stamp duty tax refunds are available for buyers to claim if they sell their main residence within three years of completing a new home.

If you bought your new main residence on or after 1st January 2017, you might be eligible to apply for a refund.

The refund is the 3% surcharge.

Have you overpaid Stamp Duty Land Tax?

We can help you recover overpaid SDLT when buying a residential, mixed-use or commercial property? Please tell us about your overpayment to see if we can get it back from HMRC.

Complete the form here

What are the basics of Stamp Duty tax refunds?

As property accountants serving thousands of UK landlords that purchase buy-to-let properties, we know that claiming a Stamp Duty refund is a daunting prospect.

Stamp Duty Land Tax (SDLT) is a tax payable on property or land purchases. The amount of SDLT paid will differ for several reasons.

Things such as your buying status (whether you are a landlord, first-time buyer, or purchasing a holiday home) and the property price will all be factored in.

SDLT is a charge that applies when purchasing land. You can buy a movable building but not pay SDLT.

The land, not the building, will cost you SDLT, and it needs to be paid to HMRC within 14 days of the purchase.

A conveyancing solicitor will calculate stamp duty on your behalf using HMRC generic calculators.

You can also use our residential SDLT calculator.

Most conveyancing solicitors will want you to pay this money to them to prevent the risk of non-payment.

Care needs to be taken as you may be charged more than you need to pay. This is because conveyancing solicitors may not consider all the SDLT tax reliefs available.

Completing an HMRC SDLT return is a process that many property investors find overwhelming.

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Who is eligible for a Stamp Duty refund?

There are several reasons why buy-to-let investors may find that they are eligible to claim a Stamp Duty refund.

Second-home stamp duty refund:

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%.

SDLT refund for houses with an annexe:

Many investors are unaware that they may have overpaid because of it.

If you paid a stamp duty surcharge on a buy-to-let with an annexe, granny flat or similar smaller building on the grounds of the main home, you might be able to claim to HMRC.

Shared ownership stamp duty refund for first-time buyers:

Buyers are exempt from stamp duty providing the buy-to-let’s value does not exceed £500,000.

This relief can be applied retrospectively, so if you purchased as a first-time buyer after 22nd November 2017, you might be eligible for a stamp duty refund.

Stamp duty refund on uninhabitable buildings:

A court ruling in 2017 has meant that hundreds of old surcharges could be called into question by investors who have paid the top rate for buy-to-let investments that were not liveable when first purchased.

SDLT refund on miscalculations:

Some investors may have paid more stamp duty due to inaccuracy with HMRC’s online stamp duty calculator.

HMRC stated that an online tool is a guidance tool only, but many solicitors were using it to make their final calculations.

Those affected by the issue would potentially be those whose properties are deemed mixed-use or homes with an annexe.

Overpaying stamp duty often happens because of the complexity of SDLT rules.

There are five different tables of rates of stamp duty and some complicated reliefs such as Multiple Dwellings Relief and the relief for granny annexes within the stamp duty 3% surcharge for second homes.

There is also uncertainty about what a ‘dwelling’ is for SDLT and when to classify a property as mixed residential and non-residential use.

Conveyancing solicitors often err on the side of caution and advise clients to pay higher rates of SDLT.

On closer inspection, this can turn out to be too much.

Free Online Tax Calculators

We continue to develop brand new U.S and UK tax calculators for you to use. We focus on tax calculators such as: Income Tax, Capital Gains Tax, Stamp Duty Land Tax, Inheritance/Estate Tax

Use our online tax calculators today to help you make money-saving decisions tomorrow

Free online tax calculators



What is the process for an HMRC SDLT refund?

The stamp duty refund procedure can be done either online or by post.

HMRC guidance advises that you apply for a refund by writing to the Stamp Duty Land Tax Office, and include:

* the UTR number

* copy of the original SDLT return

* reason why you think it’s an overpayment

* the parts of the SDLT return which are wrong

* revised figures and confirmed the amount due

* contract for the land transaction

* the relevant transfer document, the lease or similar

If you have paid the higher rates of SDLT, it is recommended that you read HMRC’s guidance on stamp duty.

Have you overpaid Stamp Duty Land Tax?

We can help you recover overpaid SDLT when buying a residential, mixed-use or commercial property? Please tell us about your overpayment to see if we can get it back from HMRC.

Complete the form here

Who does the 3% SDLT surcharge apply to?

The Stamp duty surcharge applies to individuals buying a second or additional residential buy-to-let.

It also applies to companies and non-natural persons buying a first or additional residential buy-to-let.

The rules are complicated for what seems to be a straightforward process of imposing a stamp duty surcharge on second homes and buy-to-let residential buy-to-let.

If you buy a property that has a granny annexe, you may be treated as if you were buying two dwellings for the Stamp Duty surcharge.

But if one of the dwellings is worth at least 2/3 of the entire value, then the ‘subsidiary dwelling’ can be ignored for the 3% surcharge.

Using the Multiple Dwelling Relief (MDR), you can still consider “dwellings” to reduce the stamp duty surcharge using MDR.

A stamp duty refund may also be available if you paid the 3% surcharge on the purchase of your replacement main home before you sold your old main home and if you then sell the old home within three years.

Free Online Tax Courses

Want to save tax in the future?

We have now created free online tac courses to help you build wealth whilst paying less tax. Learn today and save tax tomorrow. We have covered the basics of tax filing with HMRC and IRS. We have created courses on advanced planning strategies that will save you tax in the future.

We have training programmes for UK tax and US tax. Learn today and save tax tomorrow

Free online tax course

Free – Access NOW!!

How long does a Stamp Duty refund take?

HMRC usually issue a stamp duty refund within a month, although in certain cases, they may withhold any refund while enquiring further into a claim.

Even if HMRC pay a refund promptly, they will often open an enquiry into the refund claim to check that the facts meet the conditions for the relief claim.

Free Online Tax Calculators

We continue to develop brand new U.S and UK tax calculators for you to use. We focus on tax calculators such as: Income Tax, Capital Gains Tax, Stamp Duty Land Tax, Inheritance/Estate Tax

Use our online tax calculators today to help you make money-saving decisions tomorrow

Free online tax calculators



How do I avoid Stamp Duty on a second home?

Avoiding stamp duty rates on second homes can be achieved with the assistance of a specialist landlord accountant.

Typically, you will be paying SDLT by law.

SDLT is not paid on a buy-to-let worth less than £40,000.

The additional stamp duty rates on second homes are often referred to as the 3% SDLT higher rate.

Residential property Stamp Duty rates are different depending on whether you purchase a second home in England & Northern Ireland, Wales or Scotland.

The amount of Stamp duty rates payable is also different depending on the purchase price of the buy-to-let.

Stamp Duty tax liability needs to be worked out carefully using the SDLT thresholds.

If you sell your own home and buy another home, you will not have to pay the additional 3% on that buy-to-let.

Many investors sell their current home to a third party or to their limited company to avoid this SDLT higher rate.

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