In the UK property market, it is common for a buyer to incur Stamp Duty Land Tax (SDLT) charges related to the value of their acquired home and personal circumstances. However, some situations can result in incorrect payments of SDLT and allow buyers to claim back SDLT through HMRC for overpayments. Purchasers who purchase a new home and do not sell their previous primary residence before moving in will incur the higher level of tax and qualify for a stamp duty refund once they have sold their other property within the time limits required by HMRC. To apply for a refund, buyers typically fill out the proper refund application forms available from HMRC.
Basic Understanding of Stamp Duty Land Tax
SDLT is a tax applied to real estate closings in England & Northern Ireland based upon what the buyer paid for the real estate. The amount of SDLT you will be charged for your property will either be based on how much you paid for it or whether it was a primary home. SDLT is paid shortly after closing on the sale, and the payment to HMRC is usually processed through your solicitor or licensed property conveyancer as part of the property transaction process. SDLT is a tiered tax in that different amounts of a property sale price are subject to different percentages of tax.
Standard SDLT Rates for Main Residential Property
These rates generally apply when the property being purchased will be the buyer’s only or main residence and the buyer does not own another residential property at the time of purchase.
| Property Price Band | SDLT Rate |
|---|---|
| Up to £250,000 | 0% |
| £250,001 – £925,000 | 5% |
| £925,001 – £1.5 million | 10% |
| Above £1.5 million | 12% |
Higher SDLT Rates for Additional Properties
If a buyer purchases a property while still owning another residential property, the higher rate surcharge applies. This additional charge increases the SDLT payable and is designed to apply to second homes and buy-to-let properties. In many cases, this additional tax is temporary. If the buyer later sells their previous main residence, they may be able to submit a stamp duty reclaim for the extra surcharge that was paid.
| Property Price Band | Standard SDLT Rate | Additional Property Rate |
|---|---|---|
| Up to £250,000 | 0% | 3% |
| £250,001 – £925,000 | 5% | 8% |
| £925,001 – £1.5 million | 10% | 13% |
| Above £1.5 million | 12% | 15% |
What Is a Stamp Duty Refund?
A stamp duty refund is when you apply for a reimbursement of SDLT you have already paid on a property transaction due to an overpayment. This usually happens when the incorrect rate of tax has been applied, or you missed out on some exemptions or reliefs during your purchase. When you realise how much more than you should have paid in stamp duty, you can apply for a refund via HMRC and get the overpayment returned to you.
Can You Claim Stamp Duty Back?
Yes, in several situations you can claim stamp duty back. Some of the most common cases include:
- Selling Your Previous Main Residence
If you have 2 properties, you’ll be charged a higher rate surcharge, but you can also apply for a refund of the surcharge when you sell your home within a specified period.
- First-Time Buyer Relief Applied Incorrectly
You may qualify for an SDLT exemption as a new buyer. If you didn’t apply for this exemption, or if your exemption paperwork was filled out incorrectly, you might recover the great deal of money you spent on SDLT because of that exemption.
- Mixed-Use Property Purchases
If a property is both residential and commercial (mixed-use), it must be assessed and taxable as non-residential. You may qualify to get a refund of the Surcharge if your property was improperly assessed and/or taxed as residential.
- Errors in SDLT Calculations
You may have overpaid your SDLT due to not having the correct property valuation, classification, or transaction details, and you can recover your overpayment of SDLT.
How to Apply for Stamp Duty Refund
You can claim a stamp duty refund from HMRC if you think that you may have overpaid. The typical steps involved in claiming a stamp duty refund through HMRC are to:
- Review the original SDLT return that you submitted when you purchased the property.
- Complete the appropriate Stamp Duty Refund Form or request an amendment of your original SDLT return.
- Provide supporting documentation such as settlement statements or other evidence of sale, or records of changes made when you were conveyancing.
- Submit your Stamp Duty Refund Claim online or by post to HMRC.
HMRC may need to contact you if they require further information from you before processing your claim.
The Stamp Duty Refund Process
Follow the steps usually required to claim back your Stamp Duty.
- Confirm Your Eligibility: Ensure you have met the conditions for claiming a refund.
- Prepare Your Documentation: You’ll need to gather documentation to support your claim, which may include Purchase Details, SDLT Reference Numbers and Property Documentation.
- Submit A Claim to HMRC for a Stamp Duty Reclaim Request: submit the duly completed/signed refund form to HMRC.
- HMRC Review: HMRC will conduct a review of your claim and may ask for supplemental evidence to approve your refund.
- Refund Payment: HMRC will pay the approved Stamp Duty full refund directly into your nominated bank account once the review process is completed.
Usually, provided the refund claim submitted is complete and in order, HMRC will review and process your refund claim quickly.
How Long Does Stamp Duty Refund Take?
HMRC’s goal is to complete most claims within around 15 working days of receiving them. There may be delays or different timeframes depending on the type of claim you make. For example:
- Simple (Easy to address) claims: generally take between 2 and 3 weeks.
- More complex (Difficult to address): such cases take much longer (many months).
- If further checks need to be carried out (unusual), the claim may take up to 6 months to be paid out.
Submissions made with all necessary information will be faster to process through HMRC and therefore quicker to pay out.
How Reflex Accounting Can Help
The tax rules around buying or selling property confuse many people, especially when they’re unsure if they can claim a Stamp Duty refund. At Reflex Accounting, we help property buyers and landlords work out whether they’ve overpaid Stamp Duty Land Tax and guide them through the refund process from start to finish.
We can:
- Review your property transaction and SDLT calculations to see if a refund claim is possible.
- Explain, in plain English, why you may be entitled to money back and how much you could reclaim.
- Gather and organise the supporting documents HMRC expects to see.
- Prepare and submit your Stamp Duty refund claim to HMRC so it is clear, complete and processed as smoothly as possible.
So if you’d like us to check your position and handle the claim for you, please contact Reflex Accounting or email info@reflexaccounting.co.uk.
FAQs
When can I claim Stamp Duty back on a second home?
You can claim a stamp duty refund if you paid the higher SDLT rate when buying a new home and later sold your previous main residence within three years. The refund claim must usually be submitted within 12 months of selling the old property.
Can first-time buyers claim Stamp Duty back?
First-time buyers normally receive SDLT relief during the purchase. A refund may only apply if the relief was not applied correctly in the original SDLT return.
Can I get Stamp Duty back if the sale falls through?
If the property transaction was cancelled before completion and SDLT was paid, a refund may be possible. If the purchase is completed, the tax usually cannot be reclaimed.
Can I claim a Stamp Duty refund after three years?
Generally no. The previous main residence must normally be sold within three years to qualify for a refund of the additional SDLT surcharge.
How long does HMRC take to pay a Stamp Duty refund?
HMRC usually processes straightforward refund claims within about 15 working days, although complex cases may
