Have you overpaid your stamp duty land tax?

*Article updated: 5 November 2024

In recent years, Stamp Duty Land Tax (SDLT) has undergone several changes, leading to confusion and a more urgent requirement for specialist advice to determine the right amount of SDLT due.

The majority of property purchases are dealt with by a solicitor or conveyancer, but most of the time their services do not include providing advice on the stamp duty land tax (SDLT) liability. Therefore buyers could be missing an opportunity to reduce their SDLT bill, either because they could be eligible for reliefs or perhaps because they have paid the higher rates (5%, or previously 3% surcharge) where it is not applicable, or they are unaware that they may qualify for a refund of the higher rates when they later sell their old main residence.

PEM have advised many clients on their SDLT position and typically savings can be made where:

• The client has been told to pay the surcharge but their situation means this is not the case;
• The client is eligible for a refund of the surcharge when they later sell their old main residence;
• The purchase consists of more than one dwelling, and multiple dwellings relief is available (for purchases prior to 1 June 2024)
• The property has features which allow access to the non-residential rates

For example, one of our clients bought a large house with a cottage and flat in the grounds. They paid £153K in SDLT but PEM reviewed the case and identified the opportunity to reduce this to £70K, a saving of £83K.

Timing is crucial in making a claim for a refund. HMRC states buyers have 12 months from the filing date to amend any returns. There are limited circumstances where the deadline is 4 years but in the majority of cases this extended deadline is not available.

We are also seeing cases where HMRC are opening enquiries into purchases made by companies of residential properties for over £500,000. There are hidden pitfalls which can result in a flat 17% rate (15% for purchases on or before 30 October 2024) applying to the purchase. Forewarned is forearmed and we can help companies ensure they don’t get caught by this trap.

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