Could you have overpaid on your stamp duty bill?


A surprisingly high number of people have been getting their tax calculations wrong when buying second homes or buy-to-let properties, new research has revealed, and many are now owed a refund.

Figures from HMRC compiled by estate agent Jackson-Stops show that many buyers are still confused by the 3% stamp duty surcharge, which has been in operation since April 2016 and applies to additional home purchases and buy-to-let property investments.

At least 15,700 buyers paid too much stamp duty last year, the data shows, and misunderstandings of how stamp duty is calculated could be putting some people off making purchases altogether.

One example cited by Jackson-Stops was of a buyer who was saved by the agency from wrongly paying an additional £18,000 tax bill on a £600,000 house purchase, meaning they paid just £20,000 instead of £38,000, because the surcharge did not apply to their purchase.

Confusion over costs

Jackson-Stops explained: “Some assume that owning any other property triggers liability for [the stamp duty surcharge].

“But it should not apply when replacing your ‘principal place of residence’ and, if you move before selling your previous home, you have three years to claim the 3% surcharge back, when you do.”

HMRC commented that they received enquiries relating to the surcharge on a daily basis as it is the most widely misunderstood aspect of the tax, with mixed use dwellings adding another layer of complications. This includes properties which also comprise offices or agricultural land, which means commercial rather than residential stamp duty rates can apply.

Getting it right

Another little known loophole is for those buying multiple dwellings in one transaction, where tax is calculated based on the individual average price and treats it as a whole purchase rather than separate – and can mean the buyer pays less tax.

Ultimately, buy-to-let investors and those buying second homes need to make sure they do their research to find out how they will be affected by stamp duty before going ahead with any purchase. Use our stamp duty calculator as a guide, or contact HMRC for more detailed information on how the tax applies to you.

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Could you have overpaid on your stamp duty bill?


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