Did You Know?
HM Revenue & Customs (HMRC) has refunded £127m of stamp duty to second-homeowners since the surcharge was introduced: 6,800 additional property refunds totalling £80m were paid in 2016/17 with a further £47m repaid in Q2 2017. In total, HMRC had to give refunds on 10,700 transactions at an average cost of £11,869 each.
In one case handled by our team, a young woman buying a flat, named her father as a guarantor and borrower on the mortgage. She was incorrectly told that as her father already owned a separate property, he was liable for the 3% surcharge. This meant being incorrectly charged £14,000 for stamp duty, when the correct bill was £5,000. We submitted the complicated Stamp Duty refund application and secured a £9,000 refund.
What is Stamp Duty Land Tax (SDLT)?
Stamp Duty Land Tax (SDLT) is a tax payable by property purchasers in England, Wales and Northern Ireland. Most people use a solicitor or legal conveyancer to act for them, but it’s the purchaser’s responsibility to pay any SDLT and many conveyancers simply do not give adequate advice on the complexities of Stamp Duty. In Scotland, it’s called the Land and Buildings Transaction Tax (LBTT).
Looking at the current stamp duty rates it seems fairly straightforward but it is a complicated tax that has had numerous changes over the years. Even HMRC's own Stamp Duty calculator is only intended as guidance. The complex legislation is full of exemptions, reliefs and qualifying criteria and it is unfair to expect conveyancing solicitors to have in depth knowledge of this complicated tax system. This is why so many mistakes are made.
The stamp duty rates are currently set at the following thresholds:
- Up to £500,000 nil
- £500,001 to £925,000 5%,
- £925,001 to £1.5 million 10%,
- Above £1.5 million 12%, and
- Second homes 3% - 15%