Burning questions on stamp duty land tax answered

Posted 20th June 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 stamp duty advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty

🔥 Three Burning Questions on Stamp Duty 🔥

Stamp Duty Land Tax is a complex, ever-shifting part of the UK property landscape, and is prone to causing confusion for both buyers and their advisors. Here, we tackle three of the most often searched questions about SDLT on Google in recent months.

🔥 Can Stamp Duty be deducted from capital gains tax?🔥

If a property is owned by a business (for example as part of a BTL portfolio in a limited company), then Stamp Duty Land Tax paid on its acquisition is one of the costs which can be offset against Capital Gains tax charged on its disposal. Other such costs include fees for marketing or valuation of the asset and costs incurred improving the asset (for example building an extension) though NOT the costs of repairs made to the property.

Depending on the original SDLT bill, the amount of value gained while you have owned the property, and the amount spent on fees, this can effectively reduce a potential CGT bill to a nominal if not zero sum.

🔥 Can stamp duty be refunded? 🔥

Stamp Duty Land Tax is able to be refunded in certain circumstances. The first and most obvious is when the SDLT on a property has been overpaid. It is possible, with the help of an expert, to submit a new return to HMRC detailing the correct amount of SDLT on the purchase together with a written explanation of the technical details.

But there are other circumstances where a refund may be due, such as when you pay an additional surcharge on a second residential property. If your previous main residence is sold within 3 years of the acquisition, and the new property becomes your main residence, a refund of the surcharge can be obtained from HMRC.

Read: How an annexe could save you thousands on stamp duty

As with any other tax, it is always worth consulting the advice of an expert tax adviser to ensure that the correct amount has been paid, in order to avoid having to seek a refund in the first place.

We are the UK’s leading stamp duty advisers, and we can reclaim overpaid stamp duty from HMRC for you by contacting us

🔥 Can stamp duty be added to a mortgage? 🔥

There is no hard and fast provision in UK property legislation allowing for SDLT to be added to a mortgage amount, but neither is there any forbidding it. Essentially, if you can make the numbers work, it is perfectly possible to borrow the SDLT amount required on your purchase from the mortgage lender by sacrificing some of your deposit monies to cover the cost and borrowing the corresponding increased amount.

This is unlikely to be a solution for first-time buyers, who in the current market mostly struggle to obtain the requisite deposit for a property, though there are many new build developers who offer to ‘pay your Stamp Duty’ as an incentive on purchasing.

Read: How to tell if you’ve overpaid stamp duty land tax

It must also be borne in mind that ‘borrowing’ your SDLT on the mortgage means that the repayment of the same will almost certainly be much higher in total than the original amount itself. This is even more pronounced in the current climate, with inflation still high and mortgage interest rates averaging higher than normal as a result. This is, of course, subject to change, but it would be wise to take extensive financial and tax advice before seeking to use this solution.

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 stamp duty land tax advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty