Home Property £30 million in overpaid Stamp Duty Land Tax repaid to homeowners in last three years alone

£30 million in overpaid Stamp Duty Land Tax repaid to homeowners in last three years alone

by LLP Finance Reporter
11th Jul 23 2:22 pm

Recently released figures from Cornerstone Tax 2020 – the UK’s leading property tax specialists – reveal the firm has returned to their clients a total of £30,000,000 as reclaimed stamp duty fees from HMRC over the past three years.

This comes as proprietary research from Cornerstone has unveiled that millions of homeowners (61%) have never considered the possibility of errors in the stamp duty they paid.

SDLT is a tax which is charged when purchasing a property and/or second properties. In England and Northern Ireland, you’ll need to pay SDLT if the price of that property reaches a certain threshold. No stamp duty is due on a property purchase of up to £250,000 or £425,000 for first-time buyers whilst 5% of the property price is charged for prices on main residences between £250,001-£925,000 and 8% for additional properties between that price.

The top rate of the tax now stands at an eye-watering 12% for a main residence and 17% for foreign purchasers buying a second home in England or Northern Ireland. Whilst this tax is similar in Scotland (LBTT) and Wales (LTT) they have their own distinct rates that should be reviewed separately.

Amidst an ongoing cost of living crisis where many are stretching their finances to the limit to get on the property ladder, Chairman of Cornerstone Group International, David Hannah, highlights the importance of enlisting expert advice to avoid overpaying thousands of pounds in the process. Based on their industry experience, Cornerstone Tax 2020 has identified three commonly overlooked stamp duty reliefs, exemptions and misconceptions that could result in overpaying on stamp duty.

  1. Multiple Dwellings Relief:

    You can claim relief when you buy more than one dwelling if a transaction, or a number of linked transactions, includes freehold or leasehold interests in more than one dwelling.

    Cornerstone Tax 2020 has helped clients save a total of £7,662,310.56 in overpaid stamp duty on multiple dwellings. In England alone, there are currently 24.2 million households with registered multiple dwellings on their properties according to the English Housing Survey. Alarmingly, many homeowners may have overpaid on stamp duty due to errors in the dwellings’ status, resulting in an average loss of £34,987.72 in potential savings.

  1. Uninhabitable Status:

    When purchasing abandoned or uninhabitable properties, buyers may be eligible to pay a lower rate of SDLT or qualify for a tax refund. HMRC assesses SDLT based on the issues and damages of the property however, for owners of uninhabitable homes, HMRC may dispute the property’s status and deny an SDLT exemption. As a result, it is important to get the matter assessed by a specialist to ensure the correct amount of SDLT is being paid from the outset.

    Cornerstone Tax 2020 has assisted 27 clients in saving a total of £907,432.35 in SDLT, averaging £33,608.61 per customer.

  2. Pensions:

    A common practice of homeowners nearing retirement is to sell their homes, many opt for the Self-Investment Personal Pension (SIPP) scheme which allows them to invest the profits into their pension funds and pay stamp duty before the funds are deposited. In the case of a transfer of a commercial property into a SIPP or SSAS pension, the likelihood is that all of the owners of the property will also be members of the pension scheme – hence, the total discount against the stamp duty amount which would normally be due on the transfer of the property would be 100%

    Pensions appear to have been a major source of errors as businesses often sell their premises to their pension fund as part of retirement planning. This was uncovered by Cornerstone Tax 2020 in relation to Small Self-Administered Schemes (SSASs) and Self-Invested Personal Pensions (SIPPs). Some solicitors and advisors may have advised their clients that stamp duty needed to be paid when it was not – meaning up to 75,000 people could be owed compensation of up to a staggering £80,000 each.

Cornerstone has also assisted clients transferring investment properties into, and out of, companies, family trusts and others.

Cornerstone has aided 180 clients with a 100% success rate, saving an impressive £5,895,557.00, with an average of £32,753.09 per client.

Over and above these three main areas, Cornerstone Tax 2020 experts are trained in highlighting all potential stamp duty reliefs big or small. To date, Cornerstone Tax 2020 has recovered £30,000,000 in relation to the above as well as 47 additional reliefs that are not mentioned and often overlooked.

Cornerston said, “By conducting a thorough analysis, seeking professional advice, and understanding the applicable regulations, you can minimize the risk of overpaying SDLT. However, if an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.”

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