Stamp Duty Land Tax (SDLT) – have you paid too much?

06 November 2017

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 SDLT due to a little known SDLT relief for such properties. The good news is that there is 12 months from the SDLT1 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 e.g. 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.

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.

It is important to note that the 3% SDLT surcharge for additional residential properties would be very unlikely to apply to the subsidiary dwelling(s) plus the main dwelling being inevitably purchased at the same time due to a totally separate and different SDLT relief for such subsidiary dwellings from the 3% SDLT surcharge introduced in Finance Act 2016 (after protests from Sir Eric Pickles).

It has been widely reported in the financial press recently that a high proportion of property buyers overpay SDLT due to this relief and other SDLT reliefs being overlooked.

We are specialists in this area and are happy to perform an obligation-free check to see if you are entitled to a significant SDLT refund on your property purchase if you paid at least £300,000 for it and it has at least one subsidiary dwelling with a separate entrance as described above.

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.

For more details please contact Justin Bryant (justin.bryant@mhllp.co.uk or +44 (0) 2074 294 141) at our London office.

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