When Can I Claim a Stamp Duty Refund

Claim a Stamp Duty Refund

When Can I Claim a Stamp Duty Refund

Stamp duty is likely the most substantial expense you’ll encounter in addition to the purchase price when acquiring a new home in England or Northern Ireland. Is it possible to retrieve stamp duty payments? This is a valid inquiry, and the answer is yes, but only if you satisfy specific eligibility criteria.

For residents of Wimbledon, Wimbledon Village, Wimbledon Park, and Coombe, the prospect of incurring a stamp duty charge when purchasing a new property is almost inevitable. As per data from Rightmove, the average property price in Wimbledon exceeds £800,000. At these price points, even first-time buyers may find it challenging to escape the stamp duty levy. If you happen to own multiple residences, you might be subject to a higher tax rate. Nevertheless, there’s a possibility to reclaim a portion of your stamp duty payment.

In the following sections, we will guide you through the process of determining your eligibility for a stamp duty refund and the steps required to initiate a refund claim.

Stamp Duty Land Tax (SDLT) is a tax imposed in England and Northern Ireland upon property acquisition. The sum of SDLT you are liable to pay hinges on the property’s valuation, whether it serves as your sole residence, and your status as a first-time buyer.

The SDLT rates are structured in ascending percentage tiers corresponding to increases in the property’s sale price.

The SDLT brackets for primary residences are as follows:

Property Value SDLT Rate
Up to £250,000 0%
£250,001 to £925,000 5%
£925,001 to £1,500,000 10%
£1,500,001 or over 12%

First-time buyers are eligible for stamp duty tax relief and are exempt from paying any stamp duty if the property’s price is £425,000 or less. If the selling price falls between £425,001 and £625,000, a 5% stamp duty rate applies to the portion within that range. However, if the price exceeds this threshold, first-time buyers do not qualify for any tax relief.

It’s important to note that irrespective of the applicable rate, failing to submit a return and pay the stamp duty within 14 days of finalizing your property sale can result in fines.

Must Read: Can You Pay Stamp Duty in Installments?

What Is The Multiple Property Stamp Duty Surcharge Rate?

If you are purchasing an additional property, whether it’s a rental property, a holiday home, or an extra residence, an additional 3% surcharge is imposed on top of the standard stamp duty rates previously mentioned.

The stamp duty rates for second homes are as follows:

Property Value SDLT Rate
Up to £250,000 3%
£250,001 to £925,000 8%
£925,001 to £1,500,000 13%
£1,500,001 or over 15%

If you acquire your next home before selling your previous one, you typically incur a surcharge for additional properties. This stamp duty surcharge also extends to properties acquired for buy-to-let purposes or those purchased through a limited company. However, there are instances where you may be eligible to request a Stamp Duty Land Tax (SDLT) refund. We will clarify the eligibility criteria for those who may be entitled to a refund and provide guidance on the process for those who meet the requirements.

Why Might I Be Eligible For A Stamp Duty Refund?

If you purchase a second home and subsequently sell your original residence within three years, you may be eligible for a stamp duty refund. This primarily applies to buyers who temporarily own multiple properties for various reasons.

To qualify for this refund, the first property you owned must have been your primary residence, and the additional home you purchased must become your new primary residence.

Such overlaps can occur for a variety of reasons, including:

  • Your partner or spouse owns another residential property that you’ve chosen to retain while purchasing a shared home.
  • You are in the midst of divorce proceedings and own two properties while your situation is being resolved.
  • The property chain has collapsed, or you’re experiencing difficulties in selling your home but do not want to miss the opportunity to buy a new house.
  • You initially bought the new residential property for holiday stays but have decided to make it your permanent residence and sell your original home.
  • You initially purchased a property for buy-to-let purposes but have altered your plans and are now selling your home and relocating to the new address.

It’s important to note that this refund specifically covers the surcharge for additional homes, not the entire stamp duty bill.

There are also other circumstances in which you might be eligible for a stamp duty refund on residential properties, such as:

  • If you purchased the property through shared ownership as a first-time buyer on or after November 22, 2017.
  • Rules regarding properties with annexes changed in 2018. If you were charged for multiple dwellings but they are now considered as one home, you could potentially claim a refund.
  • If HMRC’s online stamp duty calculator provided an inaccurate figure, seeking expert advice is advisable, as you may be able to recover the difference.

It’s important to note that rules may vary if you purchased the house through a limited company, so it’s advisable to seek expert advice tailored to your specific situation.

How Do I Get A Stamp Duty Refund?

To claim your stamp duty refund, you must adhere to specific timelines. You can initiate your refund claim within one year from either the filing date on the newer property or within 12 months from the date of selling your previous property. You should choose the later date of the two options to ensure your refund claim is considered, but be cautious not to miss the deadline.

You have the option to submit a paper form via postal mail or complete the form electronically on the government website. You can complete the form yourself or, if you prefer, ask your solicitor to do it on your behalf. The online form is accessible on gov.uk, and you will need the following information when completing your refund request:

  1. Your own name and address as the seller.
  2. The amount of tax you paid when you purchased the second property.
  3. The purchase date and the unique transaction reference number associated with the property purchase that incurred the stamp duty surcharge.
  4. The total amount of Stamp Duty Land Tax (SDLT) you paid when you bought the property.
  5. The address of the property you have now sold.
  6. The name of the buyer to whom you sold your previous primary residence.
  7. The date when you sold your previous property.
  8. The amount of tax you are requesting to be refunded.
  9. The bank account number and the sort code of the account where you want the refund payment to be sent.

Ensure that you provide accurate and complete information to expedite the processing of your stamp duty refund claim.

How Long Does It Take To Get A Stamp Duty Refund?

Typically, the processing of the stamp duty refund takes up to 15 days after you have submitted your online form to HMRC.

When it comes to claiming your refund, exercise caution if companies reach out to you and offer to handle the refund process on a no-win, no-fee basis.

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