How to reclaim Stamp Duty Land Tax
Stamp Duty Land Tax is a big part of the property-buying process in the United Kingdom. It is a tax that every homebuyer or commercial property buyer has to pay, and the amount is usually a significant expenditure. Besides having to follow the SDLT rates, the amount you pay when you purchase a property will depend on many factors. There are slightly different rates or surcharges, depending on the property price but also on your buyer status. Whether you purchase a buy-to-let property and become a landlord, are a first-time buyer, or a foreigner buying a property in the UK will have an impact on the amount due. However, since SDLT is a self-assessed tax, people often overpay it. There is a way to reclaim Stamp Duty Land Tax, and that’s what we are going to focus on in this article.
Related: 2021 Stamp Duty Land Tax Rates
Who pays SDLT?
Buyers of all properties in the UK are the ones who’ll pay SDLT. Sellers are not required to, but, in most instances, the seller will buy another home to replace the one they’ve left, so both parties will end up paying for different transactions.
How is SDLT calculated?
Almost every Stamp Duty Land Tax calculation is made by putting the property’s purchase price into a recognised Stamp Duty calculator, which is the amount that the conveyancer will tell you needs to be paid. However, Stamp Duty Land Tax is no longer a simple transaction tax, and many exclusions can apply, which are rarely, if ever, utilised. A generic Stamp Duty calculator, by its very nature, cannot account for all the exemptions and different ways to purchase a property, which can significantly impact the amount that needs to be paid.
Related: SDLT Refunds
How do you know if you have overpaid Stamp Duty Land Tax?
Anyone who has purchased a property in the last four years and the property also meets other criteria, such as including commercial elements, communal gardens, or parking, may have overpaid SDLT at completion.
Like all tax collectors, her Majesty’s Revenue & Customs (HMRC) will not contact you to say that you’ve paid too much tax, and it is up to the individual to reclaim any excess amount paid. You can easily check your eligibility online by submitting this SDLT QUALIFICATION FORM on the Soteria Trusts website.
How long does a stamp duty land tax refund take?
According to the HMRC website, the Government has up to 9 months to review the refund application. However, from our experience working with clients and our specialist tax partner who are regulated and hold Chartered status in the UK, the average time to receive the refund from the HMRC varies between 2 to 6 months after submission of the application.
How can I reclaim Stamp Duty Land Tax?
Our Specialist Partner will request a number of documents from you and then take a few days to review them and your circumstances. If they feel you have a strong case and a high probability of getting a refund, they will prepare and submit a claim on your behalf to HMRC outlining where the incorrect assessment came from and why a refund is due. The timeline for this process varies on the complexity of the case, the number of properties involved, and access to the necessary information given to them to make the assessment.
When reviewing the transaction, the Tax Specialist will consider many things, such as the type of transaction and the SDLT paid. He also calculates the correct SDLT payment considering all available reliefs. Once he knows the full facts and the size of the overpayment that was made, he will speak with the property owner to explain his findings and the basis of the case he will submit to HMRC. If the owner wants him to go ahead and submit the refund application, they will engage the Specialist as their representative and agree on terms.
SDLT is a complex tax with more than 50 reliefs and exemptions available. Therefore, a suitably qualified and experienced Specialist must calculate the amount due rather than leave it to an HMRC calculator or a solicitor who doesn’t know the complexities and the huge margin for error that exists. Not engaging a Specialist can lead to an overpayment. Once that happens, the only way to get your money back is to hire a Tax Specialist so you can end up paying twice for something that could have been done correctly when it was first calculated.
Related: A Brief History of Stamp Duty Land Tax
How much SDLT refund can you expect to get?
In our experience, clients can expect to get a refund of 40% to up to 70% of the original amount of the SDLT paid.
What does the process of reclaiming overpaid Stamp Duty Land Tax involve?
When working with a Tax Specialist you need to be sure they have the necessary expertise to challenge HMRC, as well as be able to defend any action from them if they ever do get it wrong. Owners are asked to provide the Specialist with information and documentation at the outset that allows them to do just that. If owners agree with the amount of overpayment made, the Specialist will process the case on their behalf and deal with HMRC through the reclaim process.
Is it safe to seek SDLT refunds?
The Specialists work on a ‘No Win, No Fee’ basis, which is why they are always confident when submitting a case that it has merit for a refund – as a consequence, they have a very high success ratio.
Another essential thing to remember is that the advice that owners receive comes from the Specialist, and the quality of that advice is covered under the Public Indemnity Insurance that the Specialist has in place. That gives owners the added peace of mind that should there be no overpayment admitted by HMRC there will be no comeback on them for costs or additional taxes. Under such circumstances, the Tax Specialist will either accept HMRC’s findings or enter into the appeals process, which may be costly and could take months longer. If that does happen, the owners can sleep happy that there will be no recourse on them whatever happens and no legal or Specialist fees throughout.
The documents that you will be asked to supply at the outset include:
- The Unique Transaction Reference Number
- Copy of the original SDLT return
- The reason why you think you’ve overpaid
- The parts of the SDLT return which are wrong
- Revised figures and confirm the amount of refund due
- If necessary, the contract of the land transaction
- Relevant transfer document, the lease or similar document
After submitting a case, the owners need to sit back and wait for HMRC’s reply. If your claim is successful, the refund amount will go to the Specialist acting as the owners’ agent and from there, the net amount after the deduction of the agreed fee with the Specialist will be sent to your bank account.
1 in 5 property transactions in the UK may have overpaid SDLT
The Tax Specialist’s internal research tells them that as many as one in five SDLT returns may be incorrectly completed on property purchases. This leads to millions of pounds of overpaid SDLT, which HMRC does not openly promote. The only way to get an SDLT refund is to submit the correct assessment and seek an alteration of the original return based on the purchase facts. The number of reclaims is increasing, leading to a backlog due to the lack of resources made available by HMRC, which elongates each individual’s processing time.
Don’t wait any longer! Contact us to see if you are eligible for a Stamp Duty Land Tax Refund!
Please be advised that the information in this article regarding QNUPS and IHT is no longer accurate due to the recent changes announced in the UK Budget. Starting in April 2025, the regulations will have significant implications that may affect your understanding of these topics. We encourage you to stay informed and consult with a Soteria Trusts expert to navigate these changes effectively.
