Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) is rarely out of the news these days. It is a tax that must be paid if someone buys a property or land over a certain price in England and Northern Ireland. The tax is paid when someone:

  • buys a freehold property
  • buys a new or existing leasehold
  • buys a property through a shared ownership scheme
  • is transferred land or property in exchange for payment, for example by taking on a mortgage or buying a share in a house.

It is an increasingly complex tax and can be a very expensive additional cost when buying a home. There are a large number of exemptions and reliefs that a taxpayer can claim to reduce the amount of SDLT payable. SDLT must be paid within 14 days of completion of the purchase and, generally, the law firm who acted for the buyer will submit the online form and pay any SDLT due to HMRC on behalf of the taxpayer. 

There are now a number of organisations offering services to homebuyers to assist them to try to obtain refunds of overpaid SDLT. The detail of the property type is looked at carefully to establish whether any relief or exemption should have been claimed at the time of the original purchase. How much SDLT is paid depends on whether the use of the property is residential, non-residential or 'mixed use'. This is a property which has both residential and non-residential elements and if a property is found to be 'mixed use' the amount of SDLT payable can be substantially reduced. 

Perhaps unsurprisingly, the limits of what constitutes 'mixed use' for these purposes is now regularly being tested by the courts and the latest person to hit the headlines in this regard is the founder of Gu chocolate desserts. He has been in the news as he and his wife employed the services of a company offering tax refund services. They purchased a home for £3 million and initially paid SDLT of £258,630 on the basis that the use of the entire property was classed as residential. They then subsequently made an application to HMRC for a refund of £119,180, arguing that a footpath skirting the edge of the property rendered it 'mixed use'.

Initially, HMRC paid the refund on the basis of the submission of an amended SDLT tax return, but following an enquiry and a court case, the Gu owner and his wife have now been ordered to repay the £119,180 refund.

Those purchasing a property should carefully consider whether a retrospective application to HMRC to reduce the SDLT paid on a property purchase is wise. Amending and resubmitting the return is a fairly straightforward exercise, as is receiving the refund. However, HMRC has wide-ranging powers to investigate a claim in detail after a refund has been paid.

Property purchasers should consider obtaining detailed advice from a property specialist prior to completion of their purchase. An experienced conveyancing solicitor can often assist or can recommend appropriate, impartial advisers. As HMRC dryly commented following the Gu case: 'If it sounds too good to be true, it probably is.'

To discuss this or any other property matter, contact us.

© 2024 ASR Advantage Solicitors. All rights reserved.

ASR Advantage Law Limited t/a ‘ASR Advantage Solicitors’, ‘ASR Solicitors’, ‘Advantage Law’, ‘Brown & Corbishley Solicitors’ and ‘David Bendell & Co’ is a limited company registered in England and Wales. Company No. 7333121. Advantage Law is Authorised and Regulated by the Solicitors Regulation Authority for its Legal Services. SRA No. 565383. VAT reg. 203559621. Registered office: 70 Villa Road, Birmingham, B19 1BL. A list of Directors is available on request.
Lexcel logo