HMRC returns £30mn in overpaid stamp duty – Our feature

Posted 07th July 2023 by ctatax-admin

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for property tax advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.

Read the article on FT Adviser

“HM Revenue & Customs has returned a total of £30mn in reclaimed stamp duty fees, Cornerstone Tax has revealed.

Cornerstone said HMRC has returned £30mn to its clients from overpaid stamp duty land tax over the past three years.

This comes as research from Cornerstone revealed that 61 per cent of homeowners have never considered the possibility of errors in the stamp duty they paid.

Stamp duty land tax (SDLT) is charged when purchasing a property and/or second properties.

In England and Northern Ireland, you’ll need to pay SDLT if the price of that property reaches a certain threshold.

No stamp duty is due on a property purchase of up to £250,000 or £425,000 for first-time buyers while 5 per cent of the property price is charged for prices on main residences between £250,001 and £925,000 and 8 per cent for additional properties between that price.

The top rate of the tax now stands at 12 per cent for a main residence and 17 per cent for foreign purchasers buying a second home in England or Northern Ireland.

While this tax is similar in Scotland and Wales, they have their own distinct rates.

Cornerstone has identified three commonly overlooked stamp duty reliefs, exemptions and misconceptions that could result in overpaying on stamp duty.

Multiple dwellings relief

Someone can claim relief when they buy more than one dwelling if a transaction, or a number of linked transactions, includes freehold or leasehold interests in more than one dwelling.

Cornerstone said it has helped clients save a total of £7,662,310 in overpaid stamp duty on multiple dwellings.

In England alone, there are currently 24.8mn households with registered multiple dwellings on their properties according to the English Housing Survey.

It said many homeowners may have overpaid on stamp duty due to errors in the dwellings’ status, resulting in an average loss of £34,987 in potential savings.

Uninhabitable status

When purchasing abandoned or uninhabitable properties, buyers may be eligible to pay a lower rate of SDLT or qualify for a tax refund.

HMRC assesses SDLT based on the issues and damages of the property; however, for owners of uninhabitable homes, HMRC may dispute the property’s status and deny an SDLT exemption.

As a result, it is important to get the matter assessed by a specialist to ensure the correct amount of SDLT is being paid from the outset.

Cornerstone has assisted 27 clients in saving a total of £907,432 in SDLT, averaging £33,608 per customer.

Pensions

A common practice of homeowners nearing retirement is to sell their homes. Many opt for a self-investment personal pension which allows them to invest the profits into their pension funds and pay stamp duty before the funds are deposited.

In the case of a transfer of a commercial property into a Sipp or Ssas pension, the likelihood is that all of the owners of the property will also be members of the pension scheme – hence, the total discount against the stamp duty amount which would normally be due on the transfer of the property would be 100 per cent.

Cornerstone said pensions appear to have been a major source of errors as businesses often sell their premises to their pension fund as part of retirement planning.

Some solicitors and advisers may have advised their clients that stamp duty needed to be paid when it was not – meaning up to 75,000 people could be owed compensation.

Cornerstone said it also assisted clients transferring investment properties into, and out of, companies, family trusts and others.

It helped 180 clients, saving £5,895,557, with an average of £32,753 per client.

To date, Cornerstone said it has recovered £30mn in relation to the above as well as 47 additional reliefs that are not mentioned and often overlooked.

“By conducting a thorough analysis, seeking professional advice, and understanding the applicable regulations, you can minimize the risk of overpaying SDLT,” the firm said.

“However, if an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.”

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for property tax advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.