Stamp Duty Land Tax – Have You Paid Too Much?

Posted On December 1, 2017 By mhauk

Have you recently bought a residential property for at least £300,000 with a subsidiary dwelling, such as an annex or granny flat? If so, you are likely to have overpaid Stamp Duty Land Tax (SDLT) due to a little known SDLT relief for such properties. The good news is that there is 12 months from the SDLT filing date (the filing date is 30 days after the completion date), or effectively 13 months from your purchase date to apply to HMRC for a refund. For example, for a purchase completing on 1 December 2016, you have until 31 December 2017 to claim your SDLT refund, which would normally be £10,000 for properties between £500,000 and £925,000 and much more for higher value properties (possibly with servants’ quarters etc.) and slightly less for lower value properties, with a £300,000 property obtaining a £4,000 refund.

What is Classified as a Subsidiary Dwelling?

For the purposes of this relief, a “dwelling” means a building or part of a building which is suitable for use as a single dwelling or is in the process of being constructed or adapted for such use (s116 Finance Act 2003). To be suitable for use as a single dwelling for these purposes, there must normally be separate access to the subsidiary dwelling.

Does it Count as an Additional Property for SDLT Purposes?

Currently there is a 3% SDLT surcharge for each additional residential property you purchase. However, this would be unlikely to apply if the subsidiary dwelling(s) and the main dwelling were purchased at the same time. This is due to a separate SDLT relief from the surcharge which is available for such dwellings, introduced in the Finance Act 2016.

It has been widely reported recently that a high proportion of property buyers overpay SDLT due these types of reliefs being overlooked.

As far as the 3% SDLT surcharge for additional properties is concerned, you should be able to apply for a refund for that 3% SDLT surcharge yourself assuming you are entitled to it (NB that 3% SDLT surcharge refund is nothing to do with the potential SDLT refund described above for subsidiary dwellings), although we would also be happy to assist you with that 3% SDLT surcharge refund and advise you whether that 3% SDLT surcharge can be prevented in the first place, which is often the case yet overlooked.

We are specialists in this area and are happy to check to see if you are entitled to a significant SDLT refund on your property purchase.

To discuss this with us in more detail or if you have any questionsplease contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Construction & Real Estate team.

This article originally appeared on the blog of our member firm, MHA MacIntyre Hudson.