What is a Stamp Duty Refund?
From 1st April 2016, residential Stamp Duty Rates were increased by the UK Government for people purchasing an additional property or buy to let property. Anybody purchasing an additional property after this date, would more than likely have to pay the additional 3% SDLT on every stamp duty tax bracket, resulting in a much higher SDLT amount than expected.
However, there are certain exclusions that most people are not aware of, as well as being able to claim a refund of additional Stamp Duty paid when purchasing an additional property and special SDLT rates and rules that apply to First Time Buyers.
Higher Stamp Duty Rates / Additional Property Stamp Duty Land Tax (SDLT) - Flow Diagram & Decider
By simply answering a few questions, you can quickly determine if your purchase is subject to the higher rate of stamp duty or SDLT. Use the flow diagram below to help answer the question of "Do I have to pay the higher rate of stamp duty on my purchase?"
Higher Stamp Duty Rates - Exclusions & when additional SDLT is NOT payable
If you are purchasing an additional property or a buy to let investment property, there are certain conditions when the additional 3% SDLT DOES NOT APPLY. These are:
- Under £40,000 - If your purchase is under £40,000, you are not required to pay any additional SDLT on your purchase.
- Caravans, Mobile Homes or Houseboats - If you are purchasing any of these as your home, you will NOT be liable for any additional stamp duty liability.
- Purpose Built Student Accommodation - Additional SDLT is NOT payable when purchasing purpose built student accommodation.
- Outside of England, Wales & Northern Ireland - If you are purchasing a property outside of England, Wales & Northern Ireland, then you will NOT be liable for any additional stamp duty charges.
- Someone else holds a lease on the property - If someone else holds a lease on the property with more than 21 years to run.
- Less than 7 years lease - If you purchase a lease that has less than 7 years to run.
Replacing your Main Residence / Property - Is the Higher Rate of Stamp Duty payable?
The HMRC have published guidance on this, although it is often very confusing unless you understand your own situation as well as the situation of anybody else taking part in purchasing the additional property. HMRC states the following ...
"You won’t pay the extra 3% SDLT if the property you’re buying is replacing your main residence and that has already been sold.
If there’s a delay selling your main residence and it hasn’t been sold on the day you complete your new purchase:
- you’ll have to pay higher rates because you own 2 properties
- you may be able to get a refund if you sell your previous main home within 36 months"
So what does this mean in plain English ....
Claiming a Refund of Higher Rate additional Stamp Duty Paid
You won’t have to pay the higher rates of SDLT, if you sell your main home on the same day that you buy your new home. If however, there is a delay and you sell your main home after you purchase your new home you’ll need to pay the higher rates, but you can then claim a refund of the higher rates if your old home is sold within 3 years of buying your new home. The stamp duty refund amount will be the difference that you have paid over and above the standard rates of stamp duty on a transaction that would not be considered for additional stamp duty liablity.
A refund claim must be made within 3 months of the sale or 1 year of the filing date of the return, whichever comes later.
Here are some example scenarios:
Yourself and your partner already own a flat / apartment. You have decided to buy a house in Nottingham at a price of £300,000. The purchase of the house will exchange and complete on the same day that you sell your flat / apartment.
THE RESULT = NO HIGHER SDLT - You have sold your main residence on the same day as buying a new main residence. At the end of the transaction, you will own 1 property. No higher rate of SDLT is payable. Your SDLT calculation would be £5,000.
You own a house and are looking to purchase a flat in Sheffield on a buy to let basis for £220,000.
THE RESULT = HIGHER SDLT WOULD BE APPLIED - At the end of your transaction, you will own more than 1 property. The higher rate of SDLT is applicable and would be calculated at £8,500 instead of £1,900 for a standard residential property purchase.
We are buying a new home in London for £595,000, but will sell our current property that we live in after we have moved
THE RESULT = HIGHER SDLT WOULD BE APPLIED - At the end of your transaction, you will own more than 1 property. The higher rate of SDLT will be applied to your £595,000 purchase in London. This will result in an SDLT calculation of £37,600. However if you were to sell your current property within 3 years of buying the new property in London, you will be entitled to make a claim for a refund of the additional SDLT paid. This would be for the amount of £17,850 (£37,600 minus standard stamp duty rates of £19,750 on a £595,000 purchase).
How long does a Stamp Duty Refund take?
HMRC aim to process all stamp duty refund claims within 15 working days from the date they receive all the information which is requested in the form. If the claim is unsuccessful or there are issues with your refund claim, HMRC will issue a letter explaining the reasons why.
UPDATE: Due to the backlog of stamp duty refund claims, HMRC are currently taking 90 days or more to fully process refund claims. Please bear this in mind when looking to apply for a stamp duty refund.
Stamp Duty Refund Contact Number and HMRC Stamp Office Address
HMRC will not accept any claims for a stamp duty refund over the phone. All claims must be made in writing to the HMRC Stamp Office in Birmingham or using the UK Government's online portal. In order to gather all of the information you will require to apply for a refund, you can contact the HMRC Stamp Duty office on 0300 200 3510 Monday to Friday between 8.30am to 5pm. You can also write to the HMRC Stamp Duty office at the following address:
BT - Stamp Duty Land Tax
HM Revenue and Customs
What information will you need to claim a Stamp duty Refund?
To process your SDLT refund claim, you will need to supply information to HMRC regarding the purchase and sale of your properties. They will also require personal information for the main purchaser involved. Typically the following information will need to be gathered prior to making a claim:
- Purchaser Personal Details - Full Names, Date of Birth and full address and contact details of all of the individuals involved in the purchase of the property.
- Purchase Price - The full purchase price of the purchase property.
- Purchase Date - The date the property purchase was completed.
- Purchase Address - The full address of the purchase property.
- UTRN - This is a unique transaction reference number received by your solicitor or conveyancer when purchasing your property. The UTRN is made up of 11 characters, for example: 123456789ML. If you cannot get this form your original conveyancing solicitor, then contact the HMRC Stamp Duty helpline on 0300 200 3510. You will be asked to identify yourself and they will then provide you with the UTRN.
- Sale Address - The full address of the sale property.
- Sale Date - The date the property sale was completed.
With this information, a refund claim can be filed with HMRC.
Owning Property Abroad - Do the additional property higher Stamp Duty rates apply?
If you own property abroad and you are purchasing a property in England, Wales or Northern Ireland, then you will have to pay the additional higher rates of stamp duty on your purchase. HMRC take into account any properties owned all over the world when looking at whether additional SDLT is payable on your purchase.
What about First Time Buyers, do any of these Higher Additional Property SDLT rates apply to them?
None of these rules and rates for higher rates of SDLT for additional properties, would apply to UK first time buyers. However on the 22nd November 2017, the UK Government did announce new stamp duty rates for first time buyers to help ease the burden for younger generations entering into the residential property market for the first time. The new SDLT rates apply to first time buyers purchasing a residential property up the value of £500,000 and all parties involved in the purchase MUST BE CONSIDERED FIRST TIME BUYERS.
First Time Buyer 2017 Stamp Duty Rates
- Up to £300,000 Purchase = 0%
- £300,001 - £500,000 = 3% (on this portion of the remaining purchase price)
For any first-time buyer purchasing a property under the value of £300,000, there is actually NO STAMP DUTY TO PAY. 0% SDLT on the purchase. For further information and to compare solicitors fees for first time buyers, be sure to use our conveyancing comparison system for an up to the minute fixed fee conveyancing quote.