Why do many overpay their SDLT on residential property?

Nearly 20% of all SDLT returns are filed incorrectly, due to which millions of pounds are overpaid to the HMRC. Many overpayments occur because buyers are unaware of the differences between the standard stamp duty payment and additional surcharges. Most of the overpaid taxes could be due to miscalculation of the tax due, missed reliefs, unforeseen circumstances of the buyer, property value being miscalculated, and exceptions being missed by solicitors.

Many property buyers tend to overpay their SDLT amount primarily for two reasons: they don’t know whether property relief applies or believe that relief cannot be claimed for the said property.

Applying for a SDLT Refund

To claim a SDLT refund, buyers must complete and submit the necessary form on screen to HMRC within a specified time frame. To access the online form, you will need to be a Government Gateway user. If you do not have a Government Gateway user ID, you can create one when using the service to access the online forms and submit the necessary information.

Providing accurate and comprehensive information is crucial to ensure the refund process runs smoothly. Buyers should also be prepared to provide supporting documentation to substantiate their claim, such as proof of the change in circumstances that led to the overpayment of SDLT.

Stamp Duty Land Tax Relief

There are many residential stamp duty tax reliefs, but the major ones are:

• Second homes

One common issue is the stamp duty surcharge, which applies to second homes and can lead to overpayment if not properly accounted for.

The stamp duty payable on private properties is generally higher, and yet most conveyancers don’t understand these complex rules completely. In most cases, the 3% rates are remitted even when it is not a requirement. In order to avoid overpaying the tax, it is essential to cross-check the final amount with an experienced solicitor. This way, you can avoid the excess charges and also reclaim overpaid SDLT amounts.

Mixed-use properties

Mixed-use properties, such as those bought for residential and commercial purposes, usually attract lesser stamp duty amounts. However, the exact definition of mixed-use property is still a matter of discussion at the higher levels. Since the term ‘mixed-use’ lacks a clear definition, many cases are being heard by the Tax Tribunal for clarity. However, if you think that your property can be considered a mixed-use one, you can claim SDLT repayment from the HMRC.

Multiple Dwellings Relief

Multiple-dwelling purchasers can also take advantage of the tax relief available for them. Multiple-dwelling means a property with more than one unit (even with an extension inside the property) or an extra independent house constructed outside the

Are you eligible to reclaim SDLT?

To accurately know whether you are eligible for stamp duty relief or reclaim, especially if it involves your main residence, you should thoroughly check the purchase details of the property. If you sold your previous main residence within a specific timeframe after purchasing a new one, you might be eligible for a refund. You must submit a claim for relief to the HMRC within a year of the purchase. If the tax was overpaid because the conveyancer didn’t claim relief, a plea to amend the SDLT return could be made. Further, you can also reclaim the excess Stamp Duty Tax.

If you are going by the tax calculators present on the HMRC website, please note that these calculators are only meant to provide you with an approximate value. The tax amount that the HMRC calculators calculate doesn’t take into account many factors that impact the tax due. So, it is advisable to consider the calculator as merely a guide and not a credible tool for SDLT calculation.

Wrapping up

We have provided you with a broad overview of the residential Stamp Duty Land Tax calculation and ways to reclaim overpaid tax amounts. The tax laws are complex, and any layperson will find these laws challenging and tough to comprehend. Moreover, the laws have been changed so many times over the past few years that you would do better if you sought help from tax experts or property accountants so that you don’t end up paying more than necessary.

Seeking Professional Advice on SDLT Refunds

Navigating the complexities of SDLT refunds can be challenging for individuals unfamiliar with the intricacies of property transactions and tax regulations. Seeking guidance from a qualified tax professional or conveyancer can help buyers understand their eligibility for a refund, complete the necessary paperwork correctly, and facilitate the refund process efficiently. By engaging with experts in the field, buyers can ensure that they maximise their chances of securing a SDLT refund.