HMRC update guidance on work travel & tax relief

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Are you eligible for a Stamp Duty Land Tax (SDLT) refund? The rules are complex – making it easy to accidentally overpay.

This means, if you’ve bought a property recently with multiple dwellings (e.g. an annex) or that is uninhabitable then the answer could be yes.

In this article we look at some of the common types of stamp duty land tax relief, how to know if you are eligible for Stamp Duty Land Tax relief and how to claim if you have paid too high a rate of Stamp Duty Land Tax.

What is Stamp Duty Land Tax?

Firstly, what exactly is stamp duty land tax? The Stamp Duty Land Tax (SDLT) is a tax that you pay when you buy a property over a certain threshold in England or Northern Ireland (Please note, if the land is in Scotland or Wales then then the tax is different).

You pay Stamp Duty Land Tax when you:

  • buy a freehold property
  • buy a new or existing leasehold
  • buy a property through a shared ownership scheme
  • are transferred land or property in exchange for payment, for example you take on a mortgage or buy a share in a house

What are the 2023 thresholds for Stamp Duty Land Tax

As of 2023 the current thresholds for paying Stamp Duty Land Tax are:

  • £250,000 for residential properties
  • £425,000 for first-time buyers buying a residential property worth £625,000 or less
  • £150,000 for non-residential land and properties

The rate of SDLT you pay will vary depending on your circumstances and the property you are purchasing. The HMRC have produced a helpful stamp duty land tax calculator to help you work out how much you have to pay.

Are you eligible for Stamp Duty Land Tax relief?

Another factor that will impact how much Stamp Duty Land Tax you pay is if you are eligible for Stamp Duty Land Tax relief.

There are plenty of different circumstances that might make you eligible for relief. A full list of guidance on Stamp Duty Land Tax relief can be found here.

While some of the categories of Stamp Duty Land Tax relief are well known, such as Stamp Duty Land Tax relief for first-time buyers, other categories of stamp duty relief are less common knowledge. For example, when purchasing a property with multiple dwellings, or when purchasing a property that is uninhabitable.

As these reliefs are not applied automatically by HMRC, this can lead to you overpaying, and as result being eligible for a refund.

Do I qualify for multiple dwelling Stamp Duty Land Tax relief?

Stamp duty tax relief is available when buying a property with multiple dwellings. Separate dwellings could be an annex, small flat or other building on the grounds of your main home.

In this situation, you could have a significant saving on the stamp duty tax you pay. This is as the Stamp Duty Land Tax you would have to pay is worked out using a different calculation to a single dwelling property.

As this calculation can be complex, we always recommend talking to an accountant about what is best for your situation. An accountant experienced in property, such as RA Accountants, can be invaluable in guiding you through this process or carrying it out on your behalf.

Do I qualify for Stamp Duty Land Tax on an uninhabitable property?

If you have purchased a property that has deteriorated or been damaged to the point that it can no longer be considered habitable, then it might be liable for a lower rate of Stamp Duty Land Tax than the residential rate.

It is important to consider here that there is a clear distinction in the eyes of the HMRC between an uninhabitable property and one in need of modernisation and repair.

A property with the following issues would be considered in need of repair, but is not uninhabitable:

  • The temporary removal of bathroom or kitchen facilities before sale.
  • Substantial repairs required to windows, floors, or a roof.
  • Replacement boiler and pipework or
  • Unsafe electrical wiring.
  • The need to switch services back on.
  • An infestation of pests.
  • Damp proofing required or plasterboard damage.
  • Flood damage.

The following issues would make a property uninhabitable:

  • Where repair work cannot be undertaken safely because of high levels of asbestos that cannot be removed without deconstructing the property.
  • Where there is high radioactive pollution present.
  • Where there is a high probability of walls collapsing.
  • Where there are hazards present that would cause a local authority to issue a prohibition notice restricting use of the premises.

If the property you purchased was classed as uninhabitable you would then be liable for a lower rate of Stamp Duty Land Tax.

Am I eligible for a Stamp Duty Land Tax refund?

In both these cases the relief or rate is not applied automatically. So, if you have paid the higher residential Stamp Duty Land Tax rate, without applying for relief, then you could be eligible for a stamp duty tax refund.

How long do I have to claim SDLT reliefs?

If you have purchased a property with multiple dwellings, you have up to 12 months to claim multiple dwellings relief.

If you have purchased an uninhabitable property, then you have up to 4 years to claim.

How do I claim uninhabitable property or multiple dwellings Stamp Duty Land Tax relief?

You can claim for a stamp duty refund online or via post.

However, as the process can be complex, specialised accountants such as RA Accountants can help you.

If you are looking for advice on claiming a stamp tax refund, or simply how to best manage your property accounts then our experts are here to help.

We offer a complimentary, initial online consultation to discuss your personal circumstances and to see how we can help. Get in touch to book your appointment today.

These articles are for guidance only and professional advice should be obtained before acting on any information contained in them.

No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.

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