Claiming a Refund on Stamp Duty

Claiming a Refund on Stamp Duty

When the higher rates apply

Individuals and companies need to pay the higher rates when they buy an additional residential property in England, Wales or Northern Ireland. The higher rates apply even if your other residential properties are outside any of these countries.

You’ll also need to pay the higher rates if you don’t own a residential property and buy at least 2 residential properties at the same time.

Rates on additional properties

Purchase price Rate
up to £125,000 3%
over £125,000 to £250,000 5%
over £250,000 to £925,000 8%
over £925,000 to £1.5 million 13%
over £1.5 million 15%

You’ll need to pay the higher rates on everything you give for the purchase, this is called the ‘consideration’.

If you replace your main home

You won’t have to pay the higher rates if you sell your main home on the same day you buy your new home.

If you sell your main home after you purchase your new home you’ll need to pay the higher rate. You can claim a refund of the higher rates if your old home is sold within 3 years of buying your new home.

You can claim a refund by changing the original return or completing a SDLT repayment request form. This must be claimed within 3 months of the sale or 1 year of the filing date of the return, whichever comes later.

Stamp duty rates were increased for second homes with effect from 1st April 2016. Anyone purchasing an additional property from this date onwards must pay a higher rate of stamp duty if the new property does not replace their main residence.

But what if you then decide to sell your main residence? Are you then entitled to a refund?

The good news is that if you sell your main residence within 3 years of the date on which you complete your new purchase, you are entitled to make a claim for a refund. The refund would be the amount which you have paid above what you would have been charged, had the property not been an additional property.

For example, if you purchase an additional property for a price of £270,000, the stamp duty payable would be £11,600 instead of the previous lower rate of £3,500. If you then sell your main residence within a period of 3 years from the date of completion (the date you were able to collect the keys) you would be entitled to submit a claim for the difference of £8,100.

For the refund to be valid, a claim will need to submitted to HMRC within 3 months of the completion date of the sale or within 1 year of the date on which the stamp duty was filed on the purchase – whichever comes later. The form is completed online and submitted by post to HMRC. In time this will also be able to be submitted online. There will be certain information required in order for the claim to be submitted and this information can be provided by the conveyancers who acted for you at the time of the purchase.

HMRC aim to process the repayment within 15 working days from the date they receive all the information which is requested in the form. If the claim is unsuccessful, HMRC will issue a letter explaining the reasons why.

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Alex Kerr

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