What is Stamp Duty Rebate?
A stamp duty rebate is a government repayment paid to individuals who have overpaid stamp duty land tax. There are several reasons for overpayments, such as miscalculations, complex stamp duty rates, purchasing an uninhabitable property, property defects at the time of purchase and various exemptions and reliefs available in different situations.
Some common types of stamp duty reliefs and refund reasons include first-time buyers relief, second home stamp duty refund, and refunds for properties with annexes or granny flats.
To claim a stamp duty refund, you can either do it online or by post. You may wish to hire a solicitor to handle your claim, but you can also do it yourself if you feel comfortable doing so.
It is essential to be aware of the deadlines for claiming a refund, which may vary depending on the specific circumstances. For example, buyers can claim a stamp duty refund if they sell their main residence within three years of completing on a new home.
Purpose of the blog post: This blog post aims to provide information about stamp duty rebates, including eligibility criteria, the process of claiming a refund, and related topics.
Topics covered in the post: The post will discuss stamp duty rebates, concessions, deductions, discounts, relief, and reductions. It will also cover related entities such as first-time homebuyers, property investors, home movers, residential property purchases, mortgage lenders, conveyancing solicitors, HM Revenue and Customs (HMRC), UK Treasury, Stamp Duty Land Tax (SDLT), Help to Buy Scheme, housing market, and real estate transactions.
(Disclaimer: The information provided is for general purposes only. We do not guarantee the accuracy or suitability of the website or any information contained in this post. It’s important to note that the author is not a financial, tax, or legal advisor, and it’s recommended to consult a professional before making decisions related to stamp duty. The author will not be responsible for any losses or damages resulting from the use of this information.)
In some cases, you may be eligible for a concession when buying a home, which is a lower rate of duty than what would apply if you were buying non-residential land or an investment property.
Concessions and exemptions are available to reduce the amount of transfer duty (sometimes called stamp duty) you need to pay when buying a home.
Claiming stamp duty back
Claiming stamp duty back refers to applying for a refund of stamp duty land tax that was overpaid.
This could occur if the property was incorrectly valued, the buyer qualified for exemptions or reliefs that were not applied, or there were errors in the original stamp duty calculation examples.
The process involves submitting a claim to HMRC providing details like the property address, sale price, and stamp duty paid. Supporting evidence is also required such as the conveyance deed.
The aim is to recover any stamp duty overpaid so that the buyer pays the correct amount they legally owe based on their specific circumstances. The main focus of the blog post is to provide information on eligibility and the process for claiming stamp duty refunds.
What does a rebate mean in the context of stamp duty
A rebate in the context of stamp duty refers to an amount returned to a purchaser due to overpayment or specific exemptions on the stamp duty initially owed.
Here are various definitions and explanations from different sources:
- A “Stamp Duty Rebate” refers to the amount of stamp duty actually payable by the purchaser under a contract, or the amount of stamp duty that would have been payable under the contract but for any applicable exemption which applies to the purchaser.
- The “Stamp Duty Concession Rebate” is described as an amount equal to the stamp duty concession from the State Revenue Office referable to a specific contract. If the buyer does not qualify for the concession in full for any reason, then it’s an amount equal to the concession that would have applied if the buyer did qualify in full.
- A stamp duty rebate is also defined as a stamp duty land tax refund which one can apply for through the HM Revenue and Customs (HMRC) in the UK. This rebate is applicable in cases where individuals either miscalculate or overpay in stamp duty. For instance, first-time buyers are exempt from paying any stamp duty up to a certain amount, and if they’ve overpaid, they are likely eligible for a stamp duty refund.
- “Stamp Duty Rebate” occurs when an individual has overpaid for their Stamp Duty when they should have paid less or not paid at all. This rebate allows the individual to recover some or all of the money spent on the tax initially.
These definitions and explanations underline the notion of a rebate as a mechanism to return overpaid amounts or provide concessions on stamp duty to eligible individuals.
TLDR: How to reclaim stamp duty / Refund rules
Can you claim stamp duty back
You can claim a stamp duty back through a rebate if you’ve overpaid or are eligible for certain exemptions. Below is the process how to how to get stamp duty refund.
How to Reclaim:
- Gather supporting documentation such as the conveyance deed, Land Registry transfer deed, and original stamp duty receipt.
- Determine the relevant time limits for submitting your claim, which are typically within 12 months but can vary.
- Submit a stamp duty refund claim form either online or by post to HMRC.
- Provide details like the property address, completion date, amount of SDLT paid, and reason for claiming the refund.
- HMRC will process valid claims and issue refunds within 15 working days of receiving all necessary information.
Rules to reclaim:
Selling Previous Main Residence:
If you sell your previous main residence within three years of purchasing a new property, and claim the refund within 12 months of the sale or within 12 months of the filing date of your SDLT tax return (whichever comes later), you can request a refund for the amount paid above the standard Stamp Duty rates.
Buying a Second Home:
If you buy a second home and sell your original residence within three years, you may qualify for a stamp duty refund. The first property must have been your main residence, and the additional home must be your new main residence.
- Claiming Within Specific Time Frames:
Most refund claims to HMRC need to be made within 12 months and 14 days of completing your purchase. However, in cases of claiming back the 3% higher rates for replacing your previous main residence, different time frames may apply.
First-time buyers who purchased a shared ownership property for £500,000 or less may also be entitled to a stamp duty refund, especially after the autumn 2018 budget which removed the stamp duty payable on these transactions retroactively
The refund rules for multiple dwellings often apply to buyers who only own multiple dwellings for a limited time.
The main criteria for a refund in such scenarios hinge on the sale of the original residence within a specified time frame, and the designation of the new residence as the main residence.
The exact rules and time frames for claiming a refund may vary, so it’s advisable to check the specifics of your transactions and consult with a tax professional or HMRC as needed.
Also, there are MDR calculator (multiple dwellings relief calculators) that you can use.
These rules provide a brief guideline for various scenarios in which you might be eligible for a stamp duty refund.
However, the specifics can get quite complex, and it might be beneficial to consult with a tax professional or contact HMRC directly to understand the exact rules that apply to your situation.
stamp duty land tax - postal address
To claim your stamp duty by post to HMRC, use the following address:
BT – Stamp Duty Land Tax
HM Revenue and Customs
You don’t need to include a street name, city name, or PO box when writing to this address. Make sure to follow all the necessary steps and provide all the required information for your claim.
Time limits for submitting stamp duty claim
- The time limit for standard claims has a deadline of 12 months after selling your previous main residence that was sold on or after 29 October 2018.
- The standard deadline is also 12 months after filing the original stamp duty land tax (SDLT) return, which is typically submitted 14 days after completing the property purchase.
- In certain special cases, an extended 4 year window after the transaction is allowed for submitting the stamp duty refund claim.
- The exact extended deadline can be 12 months + 14 days or 4 years after the SDLT return filing date, depending on the situation.
- There is also a specific 3 year time frame for buyers who sell their main home within 3 years of purchasing a new primary residence.
What is the standard residential stamp duty
A homebuyer purchasing a £300,000 property as their main residence (second home) would typically pay 0% SDLT, since this falls under the £250,000 0% threshold.
To minimize stamp duty, the buyer should confirm they qualify for main residence treatment and that the property value does not cross into a higher SDLT bracket.
Checking eligibility for first-time buyer relief could also reduce the amount owed.
In summary, standard residential stamp duty rates range from 0% to 12% based on property value brackets. Ensuring the right property type, verifying the value bracket, and claiming relevant reliefs can help buyers pay the lowest SDLT amount legally required.
How does the stamp duty claim work
For example, if a first-time homebuyer paid the standard residential stamp duty rate but later realizes they qualified for first-time buyer relief, they could submit a claim to recover the excess stamp duty paid.
To achieve the best outcome, the buyer should gather supporting documents like the conveyance deed and original stamp duty receipt, and submit the claim form accurately within the time limit. Following the eligibility criteria and providing full details will help ensure HMRC can process the refund smoothly.
In this scenario, the homebuyer overpaid stamp duty but can recover the excess by properly submitting a claim form and documentation within the deadline. Carefully checking eligibility and providing complete information will enable the claimant to successfully receive their stamp duty refund.
Caution: Claim a stamp duty refund scam
It is crucial to be cautious of companies offering to claim the refund on your behalf on a no-win, no-fee basis, as some claims may be too good to be true.
To apply for a stamp duty rebate, buyers can either do it themselves, through a solicitor, or even an online mortgage service.
The process is straightforward, and the rebate amount is calculated as the difference between the Stamp Duty originally paid and the lower non-residential rate. In some cases, buyers have been able to reclaim up to 60% of the original stamp duty amount paid.
If you are uncertain about your eligibility for a stamp duty refund, the government recommends going back to your initial conveyancer for guidance.
Stamp Duty Rebate for Repair Works and Renovations
Stamp duty rebates and repair works
Stamp duty land tax (SDLT) reliefs may be available to first-time buyers, those buying multiple dwellings, property developers, charities, etc. But major repairs alone do not qualify for relief. This means you cannot directly claim a stamp duty rebate on renovations to a property.
However, there are some scenarios where you may be eligible for a stamp duty refund or reduction when purchasing a property that requires renovations:
- If you purchase a property that is uninhabitable or derelict, you may qualify for a stamp duty discount or refund. Properties that lack basic amenities like heating or water, or require major work like asbestos removal, are generally not considered residential and may be eligible for lower stamp duty rates.
- If you paid the higher stamp duty surcharge as a second home buyer, you can claim a refund if you sell your main residence within 3 years. The surcharge is an extra 3% stamp duty on purchases of additional properties over £40,000.
- If your property has an annex, granny flat or separate living space that was incorrectly classified, you may have overpaid stamp duty and can claim a refund.
- If you simply made a miscalculation on your stamp duty and overpaid, you can claim a refund or rebate from HMRC.
- You must file an SDLT return to claim any relief, even if no tax is due.
- Tenants can sometimes make necessary repairs themselves and deduct reasonable costs from rent, if the landlord fails to make the repairs. But this does not relate to stamp duty relief.
- Costs for remodeling or improving a rental property can often be deducted for taxes in the same year they are incurred. But this is for income taxes, not stamp duty.
- Improvements that add value to a property need to be recaptured via depreciation over time, not deducted fully in one year.
- Repairs to make a property habitable would be considered improvements or capital upgrades, not normal repairs. So they do not qualify for stamp duty relief.
Stamp duty rebate for green home improvements
NatWest has called for a rebate on stamp duty to fund green home improvements across the country. The bank suggests that the government should introduce specific policies, such as a Green Stamp Duty, which can be more targeted towards key periods when people are looking at home improvements. Green home improvements can not only reduce homeowners’ carbon footprint but also increase the value of their property.
A study by the Royal Institute of Chartered Surveyors found that energy-efficient upgrades can add up to 6% to a property’s value.
To claim a stamp duty refund, you’ll need to submit an application to HMRC, either yourself, through a solicitor or using an online service.
The process is relatively straightforward but you’ll need documentation like your stamp duty receipt and evidence the property was uninhabitable if applying under that criteria. The claim generally needs to be made within a few years.
How to Claim a Stamp Duty Refund
How to make a claim the stamp duty land tax back
To claim a stamp duty refund, you can either apply online using the GOV.UK website or submit a form by post to HMRC. You may choose to hire a solicitor to handle your claim, but you can also do it yourself if you feel comfortable doing so.
When submitting your claim, you will need to provide property details, the stamp duty certificate, and the reason for the claim
Time limits for claiming a stamp duty refund
The time limits for claiming a stamp duty refund vary depending on the specific circumstances. Generally, you have 12 months from the 14th day after the effective date of the land transaction to apply for an SDLT refund claim to HMRC.
However, in certain special cases, a stamp duty refund claim can be made to HMRC up to 4 years after the transaction concerned. To claim a stamp duty refund, contact the conveyancer who handled your original purchase within 4 years of the transaction.
For example, a homebuyer who paid the 3% stamp duty surcharge as a second home buyer could get a refund if they sell their prior main residence within 3 years. The time limit provides incentive to sell promptly.
To get the refund, the buyer should submit the claim within 12 months of selling their old home, along with supporting documents proving it was their previous residence. Meeting the 1 year deadline ensures they receive their refund.
Stamp duty refunds for certain situations like the second home surcharge must be claimed within strict time limits, usually 12 months. Submitting a complete claim with evidence before the deadline allows buyers to recover any overpaid tax.
Stamp duty refund after 12 months
In most cases, you need to claim your stamp duty refund within the 12 months of purchasing the property time limit.
However, there are some exceptions where you may be able to claim a refund even after 12 months:
- If you sold your previous main residence within 3 years of purchasing the new property, you can claim a refund on the higher stamp duty rate you paid for the additional property. You have 12 months from the sale date of your previous home to make the claim
- For properties sold on or before 28 October 2018, you have 12 months from the filing date or 3 months from the sale of your previous home, whichever is later, to claim the refund
- For properties sold after 29 October 2018, you have 12 months from the sale of your previous home to claim the refund
- If there were exceptional circumstances that prevented you from selling your previous home within 3 years, you may still be eligible for a refund after explaining the situation to HMRC
- If you paid stamp duty on a property later found to be uninhabitable, you can claim a refund even after 12 months
- If your property purchase fell through and the contract was cancelled, you can claim a refund up to 1 month after registering the sales deed
- If you believe the stamp duty was miscalculated or you were eligible for a relief that was not applied, you may be able to make a claim to HMRC to correct the error and get a refund
While in 85% of the cases you need to claim a refund within 12 months, there are some special cases where you can get a stamp duty refund even after this timeframe has passed. The key is having a valid reason that meets HMRC’s criteria. You’ll need to provide documentation supporting your claim.
Stamp Duty Rates
- SDLT rates vary based on the property value. For residential properties, the current SDLT rates are:
- 0% for properties as main residence (second purchase) under £250,000
- 0% for main residence properties for first-time buyers up to £425,000
- 5% from £250,001 to £925,000
- 10% from £925,001 to £1.5 million
- 12% above £1.5 million
- SDLT is calculated based on brackets, so you only pay the rate on the portion of the property value that falls within each bracket
- First-time home buyers are exempt from SDLT on the first £300,000 for properties under £500,000
For example if you are buying your next home and you paid £415,500 your effective rate is 1.99% and you will pay £8,275 tax. SDLT tax must be paid within 14 days of purchase.
At the same time if you are buying the same property at £415,500 as an additional home the effective tax rate will be 4.99% which is £20,740.
First home buyers for the the same amount of £415,500 will pay 0% tax and only £45 STLD tax rate at £425,900.
For selling a previous main residence within 3 years of buying a replacement main residence, there is a 12 month time limit from the sale date to claim a refund of the 3% surcharge.
For example, buyers can claim a stamp duty refund if they sell their main residence within three years of completing on a new home.
Example of Stamp Duty (1) A terraced house valued at £350,000 would have a total SDLT of £0 for a first-time buyer claiming the relief.
- Value: £350,000
- SDLT: 0% for under £425,000 (first-time buyer relief)
- Total SDLT = £0
Example of Stamp Duty (2) A More expensive mews house at £625,000 would have a higher total SDLT of £10,000 for a second-time buyer.
- Value: £625,000
- SDLT: 0% on first £300,000 (first-time buyer relief) 0% on next £125,000 = £0
5% on remaining £200,000 = £10,000
- Total SDLT = £10,000
Information you need for the refund claim
- To claim a refund, complete the online form on gov.uk within the time limits
- You’ll need details like the property address, completion date, and stamp duty paid.
- When claiming a refund, you will need to provide evidence to support your claim such as the original conveyance deed.
- Be careful of companies offering no-win no-fee refund services, as you can claim directly
You may be eligible for a stamp duty refund if:
- You overpaid SDLT when you purchased the property
- The property was incorrectly valued
- You qualify for first-time buyer relief but did not claim it
- You are eligible for multiple dwellings relief but did not claim it
Even if the time limit has expired, you may still be able to claim against your professional advisor if they caused you to overpay stamp duty
It is essential to be aware of the deadlines for claiming a refund and to submit your claim within the specified time frame to avoid missing out on a potential refund.
How long does a stamp duty refund take?
Here are the key points on how long a stamp duty refund takes in the UK:
– If you submit a complete stamp duty refund claim online or by post, HMRC aims to process it within 15 working days.
– However, refunds can take longer in certain situations:
– If the claim is more complex or HMRC needs more information, it can take up to 6 months.
– Claims submitted near year-end can take longer due to increased volume.
– Recent HMRC delays have extended wait times up to 7 months in some cases.
– The timeframe also depends on when the claim is submitted:
– Claims within 12 months of payment: 15 days if complete
– Claims within 4 years of payment: No specified timeframe
– You have up to 1 year from the filing date or 3 months from selling your former main residence to claim the refund, whichever is later.
– Using a specialist stamp duty refund company can speed up the process but may cost more in fees.
While HMRC aims for 15 days, stamp duty refunds can take anywhere from 2 weeks to over 6 months depending on the complexity, timing, and completeness of the claim. Submitting a complete claim as early as possible is key to getting the fastest refund.
Is Stamp Duty a Tax Deduction?
Stamp duty is not classified as an allowable expense for tax deductions. It is a tax in itself, not a deductible expense. Stamp duty, also known as Stamp Duty Land Tax (SDLT), is a tax imposed on properties and land purchased in England and Northern Ireland.
While stamp duty is not tax-deductible, there are various reliefs and exemptions available for specific situations, such as first-time buyers. These reliefs can reduce the amount of tax you pay, but they do not make stamp duty a tax-deductible expense.
Q: Do you need professional stamp duty or you can claim it yourself?
A: Claiming a basic stamp duty refund yourself is feasible. But for complex refunds or if you want guidance, seeking qualified professional assistance can be prudent, albeit at an additional cost. Assess your specific situation to decide the best approach.
- You can claim a stamp duty refund yourself directly through HMRC’s website or by post. The process involves submitting a claim form with supporting documentation like property details, stamp duty certificate, and reason for refund.
- Using a solicitor or stamp duty expert to handle the claim can be beneficial as they will be familiar with the rules, documentation needed, and process. However, their fees (often up to 35-40% of what you are able to claim may eat into the refund amount.
- Some companies offer a ‘no win, no fee’ refund service, but be wary of the high percentage fees they may charge if successful. The average SDLT rebate claimed by expert companies is £12,500 for properties outside North Circular and the rest of England and up to £37,200 on properties within North Circular, London.
- If claiming yourself, be sure to understand eligibility criteria, gather the right documentation, and submit the claim properly within time limits. Mistakes could lead to rejection.
- The claim process tends to be straightforward for basic refund scenarios. But for more complex cases like multiple property purchases, professional help may prove worthwhile.
- Consider the refund amount expected and whether it exceeds any fees that would be incurred using an expert. Larger refunds may warrant getting professional support.
- Thoroughly research any third party before using their services for sdlt rebate.
Q: What is stamp duty surcharge?
A: Stamp duty surcharge is an additional tax imposed on buyers who purchase a second property or buy-to-let property. The surcharge is in addition to the standard stamp duty rates.
Q: How long does it take to get a stamp duty refund?
A: The time it takes to receive a stamp duty refund can vary depending on various factors. However, typically, refund claims are processed within 6-8 weeks.
Q: Can I claim back stamp duty if I buy a limited company?
A: Yes, you can claim back stamp duty if you purchase a property through a limited company. However, different rules and rates may apply.
Q: How much stamp duty can I expect to pay?
A: The amount of stamp duty you need to pay depends on the value of the property you are purchasing. You can use a stamp duty calculator to estimate the amount.
Q: Who is eligible to claim a stamp duty refund?
A: Individuals who have overpaid on their stamp duty due to errors or exemptions may be able to claim a refund. Different exemption criteria apply to different circumstances.