Stamp duty is the tax you must pay when buying land or property in the UK above a certain value. The government uses stamp duties as a source of revenue, levying this tax from the legal transaction of a purchase of a property. 

This tax must typically be paid within 30 days from the date of the purchase of a property. How much tax is payable is dependent upon the amount or value of the property purchased, what was purchased as part of the sale and whether the land or property is for residential use, non-residential use or mixed-use.

If a second property is purchased, then an additional 3% in stamp duty, on top of any revised rates the property value falls into, will need to be paid. 

 

Can Stamp Duty Be Refunded On a Second Home?

Yes, stamp duty can be refunded on a second home. However, certain factors will have to apply in order for a stamp duty rebate to be eligible. One way a homebuyer can claim back stamp duty on a second home is if they sell their main home within 3 years of buying the second. This is because if you sell your main residence within three years of buying a second property, you may prove that your second property is not an additional one but your main place of residence.

If this is the case, you may be refunded the 3% surcharge you would have paid if it were in fact a second home. 

So, you may claim back stamp duty on a second home if you meet this eligibility criteria. As of 2022, if you bought your new main residence on or after January 1 three years hence, you may be eligible to apply for a refund. As the years go on, the eligibility year for the refund will move on accordingly. 

Stamp duty can also be claimed back by a first-time buyer purchasing a property under £425,000, local authorities who make a compulsory purchase of a property in order to sell to a third party for development, property developers subject to planning obligations, charities, non-UK crown employees, and so on. 

 

How Long Do I Have to Make a Claim?

Before seriously considering the possibility of a refund of your stamp duty payment, you must be certain that you are making the claim within the correct eligibility boundaries. If you believe you are eligible, it would be worth making the claim soon rather than later due to the tight deadlines the refund policy sticks to.

Generally, filing the stamp duty rebate within 1 year of purchasing your second property is strongly advised. In some cases, exemptions may apply. For instance, if COVID-19 affected you selling your home, or perhaps a public authority order which may have caused a delay in the sale. 

 

How to Apply for a Stamp Duty Refund for a Second Home

If you are eligible and meet the above criteria, you may apply to claim back stamp duty on a second home. 

There are several ways to apply for a refund of overpaid stamp duty, depending upon the date that the tax was paid. If the claim is brought within 12 months and 14 days from the date of the payment, you may either claim through HMRC, claim against your conveyancer or estate agent or through a stamp duty rebate company

If you claim against your Conveyancer or estate agent, this would be because they have made a mistake in filing your tax return. This would involve professional negligence court proceedings to be brought against the solicitor who dealt with the purchase of the property and paid stamp duty to HMRC on your behalf.

If you make a claim to the HMRC you may fill in a tax return form online. For the application of this refund, you do not need to use a solicitor or an account. You can apply using an online form by creating a Government Gateway user ID and password and posting it to the HMRC. 

Information the HMRC will require will include:

  • Your name and address
  • Details of the property that attracted the higher rates of SDLT, including the date of purchase, and Stamp Duty Land Tax (SDLT) unique transaction reference number
  • Details of the home you’ve sold, including the date of sale, address of the property, name of the buyer
  • Amount of tax paid on the property that attracted the higher rates of SDLT
  • How much tax you’re asking for a repayment of
  • Bank account details of the person to receive the payment

HMRC will aim to process the repayment within 15 working days of the date it receives a complete account of the above information.