How to Claim Back Stamp Duty: A Step-by-Step Guide

Introduction

Stamp Duty Land Tax (SDLT) is one of the largest expenses when purchasing a property in the UK. However, in certain circumstances, you may be eligible to claim back some or all of the stamp duty you’ve paid. Whether you’ve overpaid due to a mistake, a change in your circumstances, or you qualify for relief that you weren’t aware of, reclaiming stamp duty can be a complicated process.

This guide will take you through the step-by-step process of how to claim back stamp duty, who qualifies for refunds, and common scenarios where refunds apply. If you’ve recently bought a property and think you may be entitled to a stamp duty refund, this guide will help you navigate the process and reclaim the money you’re owed.

Who Can Claim Back Stamp Duty?

There are several scenarios where you may be eligible to claim back Stamp Duty Land Tax. Some of the most common reasons for a stamp duty refund include:

1. Multiple Dwellings Relief (MDR): If you purchased a property that includes more than one dwelling, such as a house with a self-contained annex, you may qualify for Multiple Dwellings Relief. This allows you to reduce your overall SDLT liability. If you didn’t apply for MDR at the time of purchase, you can reclaim the overpaid tax.
2. Replacement of Main Residence: If you paid the additional 3% stamp duty surcharge for buying a second home but sold your previous main residence within three years, you may be eligible for a refund. The additional surcharge applies if you own more than one property at the time of purchase, but if you sell your old home within the time limit, you can claim back the surcharge.
3. Overpayment or Mistakes: In some cases, buyers may inadvertently overpay stamp duty due to a mistake in calculating the amount owed or misunderstanding of the rules. For example, if you qualified for first-time buyer relief but did not claim it, you may be able to reclaim the overpaid tax.
4. Properties Sold Back to Developers: If you purchased a property and then sold it back to the developer within three years due to a contract clause, you may be entitled to reclaim the stamp duty paid.

How to Claim Back Stamp Duty: Step-by-Step

Claiming back stamp duty can be a straightforward process if you follow the correct steps. Here’s a step-by-step guide to help you through the process:

Step 1: Determine Eligibility The first step is to determine whether you’re eligible to claim back stamp duty. Review your transaction details and consider whether any of the common refund scenarios apply to your situation, such as MDR, replacement of main residence, or an overpayment.

Step 2: Gather Documentation Once you’ve determined that you’re eligible for a refund, gather all the necessary documentation. This will typically include:

• A copy of your SDLT return (submitted when you purchased the property).
• Proof of payment (e.g., completion statement or bank statement showing the SDLT payment).
• Supporting documentation for your refund claim (e.g., proof of sale of your previous residence, evidence of multiple dwellings, or a corrected SDLT calculation).

Step 3: Submit an Amendment or Refund Request There are two ways to claim back stamp duty:

1. Amend Your SDLT Return: If you realise that you’ve overpaid within 12 months of submitting your original SDLT return, you can amend the return and request a refund directly through HMRC’s online portal.
2. Submit a Refund Request: If more than 12 months have passed, you’ll need to submit a formal stamp duty refund request to HMRC. This can be done online or by post using the SDLT Repayment Request Form. Be sure to include all the necessary documentation to support your claim.

Step 4: Wait for HMRC’s Response Once you’ve submitted your claim, HMRC will review the request and assess whether you’re eligible for a refund. The time it takes to process your claim can vary, but you should expect to hear back within 30 days. If your claim is approved, the refund will be paid directly into your bank account.

Step 5: Appeal If Necessary If HMRC denies your claim, you have the right to appeal the decision. You can do this by submitting additional documentation or seeking legal advice if you believe the decision is incorrect.

Time Limits for Reclaiming Stamp Duty

It’s important to be aware of the time limits for reclaiming stamp duty. In most cases, you must submit your claim within 12 months of the filing date of your original SDLT return. However, for certain scenarios, such as the sale of a previous main residence within three years, you have up to three years to claim a refund of the additional 3% surcharge.

If you’re unsure whether you fall within the time limit, it’s a good idea to seek advice from a tax professional or conveyancer who can help you determine whether you’re still eligible to claim back stamp duty.

Common Mistakes When Reclaiming Stamp Duty

Reclaiming stamp duty can be a complicated process, and there are several common mistakes that can lead to delays or denial of your claim. Here are some of the most common mistakes to avoid when reclaiming stamp duty:

1. Incomplete Documentation: Failing to include all the necessary supporting documents with your claim can result in delays or a rejection. Be sure to submit all required documentation, including your original SDLT return, proof of payment, and any relevant supporting evidence.
2. Missing the Deadline: If you miss the deadline for reclaiming stamp duty, HMRC will not process your refund claim. Make sure you’re aware of the applicable time limits and submit your claim within the required period.
3. Incorrect Calculations: If you’re reclaiming stamp duty due to an overpayment or a mistake in the original calculation, ensure that your corrected calculations are accurate. Submitting incorrect calculations could result in a rejected claim or additional delays.
4. Not Seeking Professional Advice: If you’re unsure about your eligibility for a refund or the steps involved in reclaiming stamp duty, it’s always a good idea to seek advice from a tax professional or conveyancer. They can help you navigate the process and ensure your claim is submitted correctly.

How Long Does It Take to Receive a Refund?

Once you’ve submitted your refund request to HMRC, it typically takes around 30 days for the claim to be processed and for the refund to be paid into your bank account. However, the processing time can vary depending on the complexity of the claim and whether any additional information is required. If your claim is particularly complex or involves significant amounts of money, it may take longer for HMRC to review and approve the refund.

In some cases, HMRC may ask for additional information or clarification, which can further delay the processing time. To avoid delays, make sure your claim is complete and accurate when you submit it, and respond promptly to any requests for additional information from HMRC.

What Happens If Your Claim Is Rejected?

If your stamp duty refund claim is rejected, HMRC will provide an explanation of why the claim was denied. If you believe the decision was incorrect, you have the option to appeal the decision. To do this, you’ll need to provide additional evidence or documentation to support your claim.

In some cases, you may need to seek legal advice or consult with a tax professional to strengthen your appeal. If your appeal is successful, HMRC will process the refund and pay it directly into your bank account.

Conclusion

Claiming back stamp duty can be a straightforward process if you follow the correct steps and ensure that your documentation is complete. Whether you’re reclaiming stamp duty due to an overpayment, applying for Multiple Dwellings Relief, or seeking a refund of the 3% surcharge for second homes, understanding the process can help you recover money you’re owed.

By gathering all the necessary documents, submitting your claim within the time limits, and working with a professional if needed, you can navigate the refund process with confidence and potentially save thousands of pounds in overpaid stamp duty.