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Investor Stamp Duty and Land Tax (SDLT)
We advise on Investor SDLT Reclaims

Stamp Duty Land Tax is the tax paid to the HMRC office to purchase land or property in the UK whose value exceeds a certain threshold. Most investors tend to overpay their due stamp duty since the entire scope of SDLT laws is vast and challenging to comprehend for most investors.
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It’s reported that nearly 20% of the entire SDLT amount collected by the HMRC is due to wrong calculations and unutilized exemptions. That’s the reason why several individuals reclaim their overpaid taxes. If you think there is a fair chance that you might have overpaid your taxes, you should continue reading this article to know more about SDLT reclaim.

Have you overpaid the SDLT charges?

Suppose you are an investor – an individual or a company – who has purchased an additional property that does not replace your primary residence, or you have bought a buy-to-let residential property. In that case, you could be charged a higher stamp duty or land tax or a 3% surcharge.

Stamp Duty Surcharge

The rates of stamp duty surcharge were revised for the purchase of a second home and buy-to-let properties in 2016. The 3% surcharge is charged over and above the current SDLT, and you would be required to pay. Let’s look at an example for better understanding:

  • Say you bought a second home for £450,000.
  • On the first £125,000, you’ll be required to pay £3,750 at a 3% surcharge (no stamp duty)
  • You’ll be paying £125,000 and £250,000 for £6,750 at a 3% surcharge and 2% stamp duty.
  • Over £250,000 to £925,000, you’ll be paying £12,000 at a 3% surcharge and 5% stamp duty.
  • So, the total SDLT and surcharge due at the end will be £22,000
Stamp Duty Land Tax

When do the Higher Stamp Duty Tax Rates Apply?

The stamp duty tax applies when you buy a property – a residential property or a part of it – with a value of £40,000 or more.

  • It is not the only residential property that owned by you that’s valued at £40,000 or more
  • Your primary residence has not been sold or given away
  • There is not pending lease on the property with 21 years left to go

Regardless of whether you intend to stay in the new property or not, you will be charged a higher tax rate. If you are married or in a civil partnership, these rules still apply to both partners. Even if your spouse is not buying the property, the law considers the property as being bought together.

If you are buying the property with an outside partner, the rules still apply to each one of you. If you are buying as a trustee, the due tax would be charged to the beneficiary of the trust.

When do the Higher Stamp Duty Tax rates Not Apply?

The higher stamp duty tax rates do not apply to certain conditions. They are:

  • The SDLT charges do not apply for people who use the new property as their primary residence and have sold their previously owned main home before buying the new property.
  • If the property value is less than £40,000 and is a mix of residential and commercial property
  • It is not a permanent fixture and is a houseboat, mobile home or caravan.
  • If the lease on the property is valid for a period of 7 years or less
  • If some other person owns the lease and the period is more than 21 years left to go

Stamp Duty Refund

Investors can claim a refund on Stamp Duty Tax if they sell their primary residence within three years of purchasing a new home. If the new house was bought on or after January 1, 2017, then as an investor, you can apply for a refund. The refund would be a 3% surcharge amount paid during SDLT calculation. This is actually the additional amount that was charged to you since the property is your second home.

Wrapping Up

These laws can be tricky to understand and overwhelming to calculate the exact SDLT amount payable by you. Tax consultants would be able to save you a ton of money on SDLT refunds and exemptions. It is possible that you might not be completely aware of the changing tax laws and their applications. That’s why we always seek the services of a solicitor or a tax consultant.

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