How to Claim Back Stamp Duty

Everything You Need to Know About Claiming Back Stamp Duty

How Can I Claim Back Stamp Duty?

Stamp duty is payable upon purchasing property in England and Northern Ireland, and is the biggest additional cost for homebuyers.

However, in some circumstances, you may be able to claim stamp duty back. There are so many different stamp duty rates to consider, that the refund process can be incredibly confusing.

Read on to find out if you’re eligible for a stamp duty refund and, if so, how to claim back stamp duty, whether it’s on a second home or on a buy to let.

What is Stamp Duty?

Stamp Duty Land Tax is a tax you pay when you purchase property in England. How much stamp duty you pay will depend on the value of the property, whether or not you’re a first time buyer and whether you already own a property.

Stamp duty rates increase as the property price increases. The amount you end up paying is calculated according to the proportion of the property price that falls into each band:

If you’re a first time buyer purchasing a property for £500,000 or less, you are entitled to tax relief on stamp duty. As a first time buyer, stamp duty will not be payable on the first £300,000.

You must pay 5% tax on the value of the property between £300,001 and £500,000. First time buyers spending more than £500,000 on their home are not entitled to any tax relief.

What is the Stamp Duty Surcharge?

If you purchase a property which will function as your only main residence, you will pay stamp duty at the standard rates.

However, if you buy a second home or a buy to let property, you’ll pay stamp duty at the standard rates plus a 3% surcharge on each band. The stamp duty tax rates for second homes and buy to let properties are the same because they both qualify as second residences.

You’re still liable to pay the stamp duty surcharge even if the property you currently own is a holiday home abroad and you’re now purchasing your first property in the UK.

It doesn’t matter whether you own a freehold or leasehold, a shared ownership property, or are a joint owner of your previous home – you have to pay additional stamp duty on your new home.

It’s also completely irrelevant whether you actually bought your previous property, inherited it or were added to the title deeds later on – you technically own the property, so any new property you purchase will be a second one.

The stamp duty rates for second homes are:

The stamp duty surcharge is also payable if you bought your new home prior to selling your previous one. However, when you come to sell your previous main home, you may be entitled to claim stamp duty back.

You must pay the stamp duty owed within 14 days of completing your house sale or risk a hefty fine.

You can use our online stamp duty calculator to help you determine what the higher rate of stamp duty is.

Who Is Entitled to a Stamp Duty Refund?

Before we discuss how to claim back stamp duty on a second home, let’s find out if you’re eligible for a refund.

You may be eligible for a stamp duty refund on your second home surcharge if you sell your main residence within three years of purchasing your additional property, and the additional property is now your main one.

There are a few reasons why you might find yourself in this situation:

– If you’re struggling to sell your home, or your sale has fallen through, you may decide to buy your new home before selling your old one.
– You may have purchased a rental property or holiday home but had a change of heart and chosen to sell your original home and live in it yourself.
– You might be buying as a couple, but one of you owns another property you have decided not to sell.
– You may end up owning two properties while you negotiate a divorce.

How to Claim Back Stamp Duty on a Second Home

So, if you think you’re eligible for a refund, here’s how to claim back stamp duty on a second home.

You can claim your stamp duty refund by completing an online form on the GOV.UK website.

To start the process of claiming back stamp duty, you’ll need:

– Details of the property that attracted the higher rates of stamp duty, including the date of purchase and the unique transaction reference number.
– Details of the previous main residence you’ve sold, including the date of sale, and the name of the buyer.
– The amount of tax paid on the property that attracted the higher rate of stamp duty.
– The amount of tax you’re asking to be repaid.
– The bank account and sort code details of the person to receive the payment.

When claiming stamp duty back, make sure you provide all your details to HMRC. HMRC will then look over your case and come to a decision as to whether you are eligible for a stamp duty rebate.

How Long Do I Have to Claim Back Stamp Duty?

You are able to apply for a stamp duty refund from HMRC if you sell your previous main residence within 3 years of paying the surcharge.

You will have a maximum of 3 months or 12 months only, once your house is sold, to apply to HMRC to reclaim your overpaid stamp duty.

How Long Does it Take for HMRC to Refund Stamp Duty?

Once you have completed the HMRC online stamp duty rebate form, your claim should be processed within 15 days.

15 days is the normal amount of time a stamp duty reclaim should take, however, this can take longer if you don’t provide all the information the HMRC requires.

If it does take longer than 15 working days, you won’t be paid any compensation for the delay, but you can request to get paid the interest on the refund and this is automatically added onto it when it’s repaid.

Can Stamp Duty Be Added to a Mortgage?

Rather than paying stamp duty separately, it is possible to add stamp duty to your mortgage. However, it’s important to note that this will incur interest over the duration of the mortgage term, and will also affect your loan to value ratio (LVR).