In this series I have explored the details of the stamp duty land tax (SDLT) landscape and how one in four property purchasers overpay their dues. If you bought a property of any kind in the last four years, then you may have overpaid your SDLT and be entitled to a refund from HMRC.
Often referred to as Stamp Duty, Stamp Duty Land Tax (SDLT) is a self-assessed tax paid by buyers of property in the UK. The amount paid is based on the value of the property, as well as other, less well known factors. Introduced in 2003 as a replacement for the old Stamp Duty, it has been one of the UK’s most adjusted and amended pieces of tax legislation ever since.
Nobody really thinks of SDLT as a tax. People assume that this ’levy’ is a simple calculated amount and that if you use the HMRC online calculator that is good enough to assess the amount you owe. But the calculator is a guide. It does not take into account any of the 37 reliefs you can claim against SDLT. Usually your professional property conveyancer will use the HMRC calculator to determine a final figure and then you may well overpay. As SDLT is a self-assessed tax if you overpay HMRC will not tell you.
The complexity of SDLT legislation, along with its tendency for change, has resulted in SDLT now being one of the least understood taxes in the UK. Most buyers rely heavily on their solicitors to correctly complete the SDLT return on their behalf. But solicitors, lawyers, agents and financial advisors are not tax specialists, and yet have been found liable in cases where they have made incorrect assumptions regarding a property, which then led to incorrect payments being made.
Add to this the fact that the SDLT calculators provided on HMRC’s websites, are not tailored to take into account all of the variables that can affect the amount due on a transaction, and there is plenty of margin for errors. In a 2018 statement to a national newspaper reporting on SDLT, HMRC clarified that the calculators are intended merely as ‘a guide’.
There are serious shortcomings in HMRC’s online SDLT tax calculator, which was not designed to take account of the present reliefs in the property tax system. Despite those shortcomings, buyers and their solicitors frequently use it and rely on it. Again HMRC themselves recently admitted their guide is intended purely as just that - ‘a mere guide’.
All this means that mistakes are common – as many as one in four SDLT returns are completed inaccurately which has led to millions of pounds being overpaid to HMRC every year. This can be because of missed reliefs based on the circumstances of the buyer, misclassification of the property being bought, or any one of the thirty seven exemptions set out in the legislation, but which are often missed by the solicitor completing the SDLT return.
If you have purchased a property you may be due a refund. The deadline for making a claim for a refund is four years from completion so if you are within that timeframe contact us for a free review. Despite the current SDLT holiday on properties below £500,000 there are a number of reliefs which can be claimed if you are currently in the process of purchasing above the threshold so again contact us for a discussion on this.
If you would like an exploratory chat about SDLT and how it may affect you, please contact me. Andrew Wood at Kaywood Ltd./BCA LinkedIn: https://www.linkedin.com/in/andrewwoodbca