Property buyers are often confused by what Stamp Duty is, when they have to pay it, and when they can reclaim it. The experts from Cornerstone Tax explain all
What is Stamp Duty and where does it apply?
Stamp Duty (or to give it it’s full name, Stamp Duty Land Tax) is a tax paid on the purchase of property, both residential and commercial. Calculated using a ‘slice’ system based on the purchase price of the property, unlike the old Stamp Duty it replaced, SDLT is a personal, self-assessed tax charged against the individual rather than a tax on documents. SDLT applies to purchases made in England and Northern Ireland. In Wales and Scotland, different taxes apply (Land Transaction Tax and Land and Buildings Transaction Tax respectively).
Why is there so much confusion about Stamp Duty payments?
Since its introduction in 2003, SDLT has undergone many changes, from the addition of numerous reliefs, exemptions and exceptions to the constant evolution of how the tax is charged, driven usually by political aims. From the switch to a ‘slice’ system of assessment (charging a certain percentage per each slice of total value, similar to income tax) to the introduction of the Higher Rate on Additional Dwellings (aka the 3% Surcharge) in 2016 and a 2% Surcharge on non UK Residents, having a complete understanding of SDLT is a moving target.
What Stamp Duty reliefs might a residential occupier be able to claim?
Not all Residential Properties are dwellings for SDLT purposes – for example they may not be suitable for “use as a dwelling” when they are purchased – think “Shell and Core” new builds or “renovation” or “fixer upper” opportunities. These attract lower rates of SDLT and No Surcharges.
Also ‘Residential’ properties might not be entirely residential and may comprise elements which change their assessment for SDLT purposes to ‘mixed use’. These can include land which stretches beyond what may reasonably be considered ‘grounds’ of the property, additional buildings with a commercial nature beyond the house itself, land with a commercial purpose and various others.
Mixed use property is assessed on a different scale and can result in significant savings compared to a residential assessment. Residential properties may also comprise more than one self-contained residence, as may be the case for a property with a ‘granny annexe’ or a larger property with additional residences such as cottages in the grounds. This may result in Multiple Dwellings Relief being available to the property, which can also result in significant savings on the tax due. These are just two examples of the reliefs which may be available.
See also: Landlords to Have New Guidance on Damp and Mould
What about an investor or developer?
Investors or developers can also benefit from MDR when purchasing multiple properties in the same transaction, for example when purchasing a block of flats. They can also gain the benefits of mixed-use assessment, for example if buying a premises comprising a shop with a flat above.
Additionally, when acquiring a residential property which is not fit for habitation at the time of purchase, relief may apply, though there are strict criteria to be met. Property with planning permission to build on may also attract appropriate reliefs. Many more can apply.
Can Cornerstone offer advice on historical Stamp Duty payments?
Absolutely – our SDLT Refunds brand specialises in providing assessment of historical transactions to determine whether the correct amount of SDLT was paid.
If I have overpaid Stamp Duty, how much might I be able to reclaim?
How much is reclaimable depends entirely on the type of property, the value of the property and how much SDLT was originally paid. Our clients come from a variety of backgrounds and we have claimed thousands back on residential properties up to seven-figure sums on large commercial transactions.
How much does it cost me to make a claim?
A claim will come with no upfront fee – we only collect a fee upon successfully obtaining a refund from HMRC. Upon successful refund, you will pay a fixed fee to us for our advice which will have been agreed upon in writing before we undertook the claim. This is the only fee you will pay – there are no hidden costs or surprise charges.
How long does it take to make a claim?
A claim should take around six weeks but this can vary dependent on the particular HMRC office dealing with the claim, the time of year, the complexity of the claim and so on. Some claims may take up to six months.
What’s the story behind Cornerstone?
Cornerstone was founded in 2006 to address the specific need for expert advice on Stamp Duty Land Tax – something which was lacking following the introduction of the tax in 2003. Since its founding, Cornerstone has helped thousands of people with SDLT-related matters, and our 5 star ‘Excellent’ Trustpilot Rating reflects our continued success.
Where can I find out more about Cornerstone?
Visit www.ctatax.uk.com to find out more about who we are, the services we provide & how to contact us.
