In this article, you will find out more about Stamp Duty Land Tax (SDLT), and when you can claim relief.
(3 minute read)
We will cover:
- When to claim Stamp Duty relief according to government guidelines
- How buyer status affects tax and surcharge amounts
Homeowners purchasing properties are liable to pay HMRC Stamp Duty Land tax (SDLT) if they exceed the threshold amounts.
Calculators provide the required amount to pay, which depends on the value of the property. However, these calculators are very basic and do not take account of scenarios where SDLT should not be liable.
For this reason, such property buyers might be unaware that they could be eligible for a refund.
Stamp duty is a standalone payment. It is applicable in England and Northern Ireland, although Scotland and Wales have similar schemes.
There are specific cases that justify claiming SDLT relief, which we will cover in today’s tax tip. Read more to find out if you are eligible.
Buyers should consider certain factors when calculating the amount of Stamp Duty, or when considering a reclaim. This is because even after paying the required amount, home buyers will be unaware that they have overpaid. There are many instances in which they can claim a refund if one of the following cases apply.
You can claim SDLT relief if:
- You’re a first-time buyer of a main residence. No Stamp Duty is applicable if the property value is up to £300,000.
- You’re purchasing two or more properties in the same transaction, which qualifies for Multiple Dwelling Relief (MDR). The claim could save you thousands in Stamp Duty.
- You’re not a UK resident. If you remained in the country for a period of 183 days during a continuous year covering the year before or the year after purchasing the property, you are liable for a reclaim.
- The house has an annexe with a market value below one-third of the total purchase price, which meets a set of specific characteristics. Some examples are having a bathroom and kitchen area, its own front door, and privacy from the main house.
- The property is uninhabitable. According to the Housing Act of 1967, properties must be suitable for basic needs such as having a workable bathroom and kitchen. Other factors making it unsafe for living conditions (such as, it containing asbestos, for example) also make buyers liable for a refund.
- Tens of thousands of people wanting to save for their personal pensions could have claimed a refund of £6bn, had they sought the adequate tax advice. Anyone who believes themselves to be eligible for a refund could make a reclaim within four years of the property purchase.
Buyers can make the claim online or by post, by providing all the relevant information to the HMRC. The claim should be processed within 15 days.
Seek expert advice
Many transactions are exempt from Stamp Duty, with up to 50 known relief scenarios. However, in most cases, customers will contact solicitors, who don’t understand the majority of these relief scenarios and make errors.
It is tricky to calculate the exact amount of required Stamp Duty, even using the HMRC calculator. Solicitors are not tax experts and very often get that calculation wrong. To avoid these errors, your best bet is to seek advice from tax experts.
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