Claiming Back Stamp Duty: Who It is Entitled To & Claiming Process

Stamp duty is a tax that we must pay when purchasing land or property in the United Kingdom that exceeds a specific value. This article will guide you in claiming back your stamp duty even in your second home.

Claiming Back Stamp Duty

As we already knew from the beginning of the article, stamp duty is a tax that we must pay when purchasing land or property in the UK that exceeds a specific value. In other words, they are available to buyers who sell their primary house within three years of completing a new home. The reimbursement is for the 3% surcharge. That is the sum in excess of what you would have been charged if the house had not been added. 

Stamp Duty is a significant component of the cost of purchasing a home; it is one of the single largest fees associated with the purchase of a property. It is applicable to purchasers of residential property in England and Northern Ireland over a specific price threshold; Scotland and Wales have slightly different systems, but the fundamentals remain the same. The amount you pay is determined by the purpose and value of the property you wish to purchase, as well as the type of buyer you are – first-time buyer, previous homeowner, landlord, and so on.

How to Request For A Refund 

You are not required to retain the services of a lawyer or accountant. You can apply online or by filling out the form on-screen, printing it, and mailing it to HMRC. However, to apply online, you must create a Government Gateway user ID and password, which you can do while using the service. HMRC will endeavour to process the repayment within 15 working days after receiving the necessary information, which includes the following: 

1. Your full name and mailing address 
2. Details about the property that triggered the increased SDLT charges include:
3. purchase date 
4. SDLT transaction reference number is unique. 
5. Particulars about the property you’ve sold, including: date of purchase, property’s address and purchaser’s name 
6. The amount of tax paid on the property was subject to the higher SDLT rates. 
7. How much tax you’re seeking reimbursement for 
8. Details of the recipient’s bank account and sort code

When and How Do You Pay Stamp Duty?

When you purchase land or property, you must pay Stamp Duty Land Tax. Stamp Duty must be paid to HMRC within 30 days of completion. To make a payment, you must complete an SDLT return and transmit it to HMRC. Typically, your solicitor will handle this for you concurrently with managing the transaction and submitting the funds to HMRC upon completion.

Why Do You Pay Stamp Duty?

Originally, Stamp Duty was levied to cover the expense of the legal documents required when purchasing a property. The term comes from the physical “stamp” of approval that the government uses to affix to your paperwork. Although the majority of documents are now digital and do not require an actual stamp, Stamp Duty is still applicable.

Nowadays, Stamp Duty is frequently greater than the cost of the documents. The Government uses SDLT primarily; as a revenue collection mechanism rather than for the purpose of processing paperwork.

Who Pays Stamp Duty?

Almost everyone who purchases a property worth more than a particular amount is subject to Stamp Duty. There are some exceptions, but your eligibility will depend on the type of buyer you are. For example, when you:

• Spend more than £250,000 on a primary or secondary residential property, a buy-to-let property, or a piece of land.
• Replace your primary residence with a new one – this does not include remortgaging.
• Previously owned property but sold it and are now renting or living with friends or family; with the intention of purchasing another.
• Marry your partner and then purchase a home together – even if one of you is a first-time buyer.
• Are a first-time buyer purchasing a house worth more than £300,000
• Can acquire a property with common ownership.
• You acquire a non-residential property worth more than £150,000.
• You acquire mixed-use land or property worth more than £150,000.

Exemptions and Exceptions to Stamp Duty 

You’re exempt from Stamp Duty if you meet the following criteria:

• You obtain land or property ownership in exchange for any payment or other consideration specified by HMRC – for example, during a divorce.
• If a property is left to you in a will, you pay Inheritance Tax on the property rather than Stamp Duty.

REQUESTING A REFUND OF STAMP DUTY

Who Qualifies For Claiming a Stamp Duty Refund?

• You can reclaim Stamp Duty only if you qualify for a refund.
• If you purchased a new primary residence without selling your former residence but then sold it within three years, you may be eligible for a Stamp Duty refund. More information is available in our guide: Stamp Duty on Second Homes.

How to Claim

To claim Stamp Duty back, you must complete an SDLT return and submit it to HMRC online or via postal mail. You can engage a solicitor or legal conveyancer to complete the return for you, but the organization is entirely your responsibility.

Claiming Back Stamp Duty On A Second Home

In case you’re wondering, there is a possibility of claiming back a stamp duty on a second home. Stamp duty is the largest additional fee that purchasers incur when purchasing property in England and Northern Ireland. In certain circumstances, you may succeed in claiming back a portion of the stamp duty you paid for your second home.

If you purchase a second house, such as a rental property, vacation home, or secondary dwelling, you must pay an additional 3% stamp duty on top of the usual rates. Additionally, the surcharge is applicable if you purchased your new property prior to selling your former one. However, if you sell your former primary residence, you may be eligible for a refund.

Why might I be entitled to a stamp duty refund?

If you sell your primary dwelling within three years of purchasing your additional property and the additional property becomes your primary residence, you may be eligible for a stamp duty refund on the second home fee. There are several possible explanations for this:

• If you are having difficulty selling your property or if your sale has fallen through, you may decide to purchase your new home first.
• You may have purchased a rental property or vacation house but later changed your mind and decided to sell and reside in your original home.
• Also, you may be purchased as a pair, but one of you may already own another property that you have chosen not to sell.
• You can find yourself with two properties while negotiating a divorce.

How do I get a stamp duty refund?

You can apply for a refund online at gov. uk. You will require the following:

• Facts about the property subject to the higher stamp duty rates, including the acquisition date and the unique transaction reference number
• Facts about your previous principal residence, including the date of sale and the buyer’s name; and the amount of tax paid on the property that was subject to the higher rate of stamp duty.
• The amount of tax you’re requesting to be reimbursed the bank account and sort code information for the recipient of the payment.

How long does it take to get a stamp duty refund?

HMRC will issue the refund within a month, although in some circumstances where a well-known claims firm is involved and has a history of generating dubious refund claims, they may suspend any reimbursement while they investigate the claim.

Even though HMRC pays the return swiftly, they frequently initiate an investigation into the refund claim to ensure that the facts support the claimed relief. If they determine that the refund was improperly made, they will send a closure notice requesting the return of the tax claimed. Where appropriate, this decision may be appealed to the tax tribunal.

If you are requesting online, after submitting the online form to HMRC, your claim should be processed within 15 days.

How To Claim your refund

Be suspicious of companies that approach you and promise to pursue the return on a no-win, no-fee basis. Self-application for stamp duty refunds is simple via the gov.uk website or by contacting HMRC.

How can you determine if you have overpaid Stamp Duty?

Stamp Duty overpayments are common these days, owing to the considerable complexity of the Stamp Duty land tax (SDLT) procedures. For example, there are five separate Stamp Duty tables and several exceedingly intricate reliefs, such as the Multiple Dwellings Relief and the relief for “granny annexes” under the 3% surcharge on second residences.

Is there a deadline for appealing SDLT refund claims?

Yes, the general rule is that claiming a refund cannot be lodged more than 12 months after the initial stamp duty return was filed on the second home, or 14 days after the original purchase was completed. However, in certain exceptional circumstances, HMRC may accept a Stamp Duty refund claim; up to four years after the transaction occurred.

If you sell your prior primary house within three years of purchasing your replacement primary residence; you have 12 months from the date of sale to claim the 3% surcharge refund.

Even though the time period for claiming a refund from HMRC has passed, you may still have grounds to sue your professional adviser; and their insurers if they led you to overpay Stamp Duty in the first place. Generally, you have six years from the day you pay Stamp Duty to make such a claim; or, if the overpayment is bigger, three years from the date you could have discovered the overpayment.

Who does the 3% SDLT surcharge on additional properties apply to?

Individuals purchasing a second or additional residential property, as well as businesses; and other non-natural people purchasing a first or additional residential property, are subject to the Stamp Duty surcharge. The criteria are quite convoluted for what appears to be a straightforward objective; of imposing a stamp duty surcharge on second residences and residential property purchased for investment purposes.

A Stamp Duty refund may also be available if you paid the 3% surcharge on the acquisition of your replacement; also your primary residence is prior to selling your previous primary residence and then selling the previous residence within three years.

FAQs’ On Claiming Back Stamp Duty