Stamp Duty Land Tax, to give it its full title, is a tax you pay when you buy property in England. How much you pay will depend upon the value of the property; whether or not you are a first-time buyer and whether you own property already.
If you buy a second home, whether rental property, holiday home or main residence, you must pay an additional 3% charge on top of the standard stamp duty due on your house purchase. You must pay the stamp duty owed within 14 days of completing on your house sale or risk a fine.
However, there are some instances where you may be able to claim back part of the stamp duty you have paid. We find out who might be eligible for a stamp duty refund and the process you will need to follow if you wish to make a claim.
Why might I be entitled to a stamp duty refund?
1. If you sell your original home within three years
Buyers are entitled to a stamp duty refund if they have bought a second home, and paid the 3% additional property stamp duty charge, but gone on to sell their original property within three years.
There are a few reasons why that might happen – if you are struggling to sell your home, or have a sale fall through, but don’t want to miss out on your dream property, for example. You may have purchased a rental property but decided to live there yourself and sell your original home within the three-year window. Or you may end up owning two properties while you negotiate a divorce.
2. The shared ownership stamp duty refund for first-time buyers
You may also be entitled to a stamp duty refund if you are a first-time buyer who purchased a shared ownership property for £500,000 or less. In the autumn 2018 budget, the chancellor removed the stamp duty payable on these transactions and made the change retrospective – so it applied to first-time buyers who purchased their homes on or after 22 November 2017.
3. If you paid additional property stamp duty on a house with an annexe
When the higher rate of stamp duty for second homes was introduced, properties with an annexe, or so-called ‘granny flat’, on their premises were liable for the higher rate – because the main home and annexe were regarded as two separate dwellings.
The rules changed in 2018, meaning such properties are no longer liable for the extra charge – as long as the main building is worth at least two-thirds of the value of the whole property and the annexe is within the main property or its grounds.
However, the new rules were not applied retrospectively. This means you can only claim a refund on transactions, which took place after the change – where your stamp duty was miscalculated based on the old rules.
4. Stamp duty refund on uninhabitable buildings
If you bought a second property, which was unfit to live in, with a view to renovating it as a buy-to-let investment, you may have been charged the stamp duty surcharge. Following a legal test case, people who paid the higher rate may be eligible for a refund. If this applies to you, take legal advice about how to proceed.
How do I get a stamp duty refund?
If you are eligible for a stamp duty refund because you bought a second home, then subsequently sold your first home within three years, you can claim your refund by completing an online form on the gov.uk website.
- details of the property that attracted the higher rates of stamp duty, including the date of purchase and the unique transaction reference number
- details of the previous main residence you’ve sold, including the date of sale, and the name of the buyer
- the amount of tax paid on the property that attracted the higher rate of stamp duty
- the amount of tax you’re asking to be repaid
- the bank account and sort code details of the person to receive the payment.
There are different deadlines for making a claim, depending on when you sold your previous home. For properties sold on or before 28 October 2018, you must submit your request within three months of the sale, or within 12 months of the filing date of the return relating to the new residence, whichever is later.
For properties sold on or after 29 October 2018, you must submit your request within 12 months of the sale of your previous main residence, or within 12 months of the filing date of the return relating to the new residence, whichever is later.
How long does it take to get a stamp duty refund?
Fill out the form on the government website, giving HMRC the correct information, and your claim should be processed within 15 days. If it’s not, you may be eligible for compensation.
Claiming your refund
Be careful of companies contacting you and offering to claim the refund on your behalf on a no-win, no-fee basis. You can easily apply for stamp duty refunds yourself on the gov.uk website or by contacting HMRC.
Find out more
If you are looking to buy property in Wimbledon, we can advise you on the many complex issues involved in the process. Contact us to find out more about our selection of properties.