stamp duty land tax... Are you paying too much?

25 November 2020

An impromptu Stamp Duty Land Tax (SDLT) holiday which was announced early on in the summer created a boom in the residential property market, something many businesses needed. Buyers were happy to hear that the first £500,000 paid for their property would be at the temporary 0% SDLT rate – but is that enough?

SDLT’s complex and regularly changing, having been subject to multiple alterations since it was first introduced in 2003, in fact, more so than any other comparable tax.

Looking beyond the temporary holiday, the legislation governing SDLT’s now full of exceptions, exemptions and reliefs, aimed at covering a vast variety of property types and property buyers.

In many cases, purchasers simply pay the highest SDLT amount based on a basic calculation without obtaining further advice on the availability of relief. With the rush for completions over the last few months and before April 2021, we expect there’ll have been more overpayments than ever.

We regularly work with property purchasers in advising on the availability of relief and determining the correct amount of SDLT to be paid. In many cases we only get to review the transaction after the event, when too much SDLT’s already been paid – but all is not lost!

Steps can however be taken to rectify incorrect returns and make retrospective claims for relief and obtain a refund. A purchaser always has 12 months from the purchase to do this, and in some cases up to 4 years.

Purchases where we regularly see SDLT being overpaid include:

  • When the property has an annexe, granny flat or guest accommodation.
  • Properties with mixed use commercial and residential.
  • Derelict or uninhabitable residential property, particularly if demolishing or developing.

If you’re about to purchase, or have recently purchased a property and would like to go through your tax obligations in relation to Stamp Duty Land Tax, then get in touch with our Head of Tax, Chris Wilson on 0113 537 3348, who can organise a no obligation review with you.