Stamp Duty refunds from HMRC Stamp Duty Land Tax (SDLT) refunds may be claimed from HMRC if overpaying tax when buying a home, second home or buy-to-let property investment. It is important to pay the correct Stamp Duty tax due on a property. When submitting SDLT Returns, correctly assessing Stamp Duty reduces any overpayment of tax. Making a claim for SDLT refunds on property purchased can be complex. Review any Stamp Duty refund claim carefully. Stamp Duty Refund Specialists What are the basics of SDLT Refunds? Stamp Duty Land Tax (SDLT) is a tax you pay on property or land purchases in England and Northern Ireland. There are similar schemes in Wales and Scotland, respectively called Land Transaction Tax (LTT) and Land and Buildings Transaction Tax (LBTT). The amount of SDLT you pay depends on your buying status (landlord, first-time buyer, or purchasing a holiday home or buy to let property) and the price of the property is all factored into the Stamp duty tax equation. A property buyer is required to pay SDLT, but Stamp duty does not incur VAT as it is a standalone tax. Stamp Duty Land Tax (SDLT) is complex and changing, and has been subject to more alterations since it was introduced in 2003 than any other comparable tax. Stamp Duty legislation is full of exemptions, exceptions and tax reliefs aimed at covering all property types and property buyers. Not all of these are obvious to conveyancers and property solicitors, some of whom differentiate simply between whether a property is residential or commercial for the purposes of SDLT tax calculations in the UK. Making a claim for an SDLT refund can be confusing with little help from HMRC, and many property purchasers struggle to complete accurate Stamp Duty tax returns. Getting the right advice is critical in ensuring that you pay the right amount of Stamp Duty, or that you claim correctly when making SDLT refunds. It is recommended that all property buyers review HMRC guidance on SDLT Returns. How can you tell if you've overpaid Stamp Duty? Overpaying Stamp Duty is commonplace due to the complexity of SDLT rules. There are five different rate tables of Stamp Duty and some complicated tax reliefs such as Multiple Dwellings Relief (MDR) and the tax relief for ‘granny annexes’ within the Stamp Duty 3% tax surcharge on second homes. There is also confusion as to what a ‘dwelling’ is for SDLT and when to classify property as mixed residential use and non-residential use. These factors affect the amount of Stamp Duty tax you pay, and conveyancers often advise clients to pay higher rates of SDLT. This turns out to be too much tax. Many property buyers have overpaid SDLT and are eligible to claim SDLT refunds on a second home or for the purchase of what is actually a mixed-use property. Legislation concerning SDLT in the UK has seen multiple changes, often when the Government wants to affect the movement of the property market. Stamp Duty rules are ever-changing in the UK, and conveyancers and solicitors are not tax experts. Some property buyers have found issues in the HMRC’s SDLT calculator, which is only designed for basic transactions and Stamp Duty tax calculations. This functional tool gives tax estimates based on narrow criteria, and without the correct inputs will give misleading figures of Stamp Duty tax to pay. Conveyancers and solicitors are expected to deal with a self-assessment tax return for each client in the form of SDLT returns. This requires them to calculate the correct amount of Stamp Duty tax on the client’s behalf, and to complete lengthy SDLT returns for the client to sign. Who is eligible to claim SDLT refunds? To claim SDLT refunds, you must have sold your previous main residence within three years of buying the new property to qualify for a Stamp Duty refund unless exceptional circumstances apply. SDLT refunds cannot be made more than 12 months after the filing date for the original Stamp Duty return. Some of the following reasons why property buyers may be eligible to claim a Stamp Duty refund include: 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% tax. For property sold on or after October 29, 2018, your SDLT refund claim must be received by HMRC within 12 months of the main residence being sold, or within a year of the new residence’s Stamp Duty filing date, whichever is later. Stamp Duty Land Tax refunds for houses with an annexe This is a common reason for making a Stamp Duty refund claim, and many people are unaware they may have overpaid SDLT as a result of it. If you pay a Stamp Duty surcharge on a property with an annexe, granny flat or similar smaller building on the grounds of your main home, you may be able to make a claim to HMRC on the SDLT you pay. Any property with a self-contained annexe on the grounds is now regarded as a single home rather than two different properties, as long as the main building is worth at least two-thirds of the overall value of the property. If your property falls into this category and your purchase was made before the changes in 2018, you could be eligible for a sizeable tax refund on the SDLT paid. Shared ownership Stamp Duty SDLT refunds for first-time buyers Shared ownership property purchased by first-time buyers is exempt from Stamp Duty Land Tax, providing the property value does not exceed £500,000. This SDLT tax relief can also be applied retrospectively, which means that if you bought a shared ownership property as a first-time buyer on or after November 22nd 2017, you may be eligible for a Stamp Duty tax refund. Stamp Duty refund on uninhabitable buildings Under the Housing Act of 1967, to be regarded as habitable a property must have suitable facilities to meet basic needs, such as maintaining hygiene and means to be able to cook. Hundreds of old Stamp Duty tax surcharges could be called into question by landlords who have previously paid the top SDLT rate for a property that was in need of renovation to make it habitable. HMRC could face a surge of retrospective claims for SDLT refunds as a result. SDLT refunds from miscalculated property You might pay more Stamp Duty than you should have due to inaccuracy with HMRC’s online Stamp Duty calculator. HMRC has stated that the online tool is only for guidance, but many conveyancers and solicitors were using it to make their final SDLT calculations on behalf of their clients. Should you feel you have paid too much tax, contact your conveyancer or the Law Society to see if you have a case for SDLT refunds or at least a valid claim.