Stamp Duty Land Tax refunds

As any property purchaser will know, Stamp Duty Land Tax (SDLT) is a tax which must be paid within 14 days of completion of the purchase. The conveyancer acting for the buyer will make the calculation and will pay the sum on their buyer client's behalf and this is probably the last time that a buyer thinks about it (until they move again!).

But SDLT is a complicated tax. The amount of tax payable can depend on issues such as:

  • whether more than one property is purchased at the same time
  • whether any part of the property is commercial use
  • whether there is any land (or woodland) sold with the property
  • whether there is an annexe ('granny flat') or outbuilding.

Any of the above can affect the SDLT payable and a buyer might overpay on SDLT. It is possible to apply for a refund of overpaid SDLT and a number of companies are writing to homeowners in this regard offering to act for the buyer to make an application for a refund.

But buyers should be cautious – these firms will want a fee for their work and there is no guarantee that the conveyancer got the SDLT wrong. Some claims can take HMRC months to process and another important point is that just because HMRC pays a refund does not mean that the refund is due. 

On its website HMRC states that to process refunds quickly, they will make a refund payment without checking. This means that even after a repayment has been made, HMRC has not agreed that it is due. They have up to 9 months to make a check and if it turns out that they have sent a refund that was not due, they will require it to be repaid together with interest and any penalties. So, this is not quite the SDLT silver lining that many homeowners would be hoping for.

If a buyer is concerned that they have overpaid SDLT, they should go back to the conveyancer who acted on the purchase. It is possible to write to HMRC for a determination on the SDLT position.

Specialist advice should be sought – rushing into the arms of a cold calling claims company will not always be the right solution.

To discuss this or any other property matter, contact us.