Property bought in the UK that is worth over a certain value will be subject to Stamp Duty, a tax on properties and land. Stamp duty must typically be paid within 30 days from the date of the purchase of the property. 

The amount of tax that will be required to pay is dependent on several factors. This will include 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. 

However, some people do overpay in stamp duty – perhaps due to miscalculations, exemptions applying or for other reasons. Nonetheless, stamp duty can be refunded (what is also known as a stamp duty rebate) and the process is relatively quick. 

Can I Get a Stamp Duty Refund?

You may be able to receive a stamp duty refund if you meet the eligibility requirements to claim back on this tax.

The HM Revenue and Customs (HMRC) estimates that over £2 billion in stamp duty is overpaid each year. These overpayments may arise because professionals have made mistakes when filing a return on your behalf. If it can be proved that an overpayment of stamp duty has been made, then a claim for repayment can be instigated.

Besides a mistake on the behalf of the required professionals when filing a tax return, there are several additional reasons why you may be eligible for a stamp duty refund. 

Stamp Duty Refund Eligibility 

There are many reasons why one may be eligible for a stamp duty refund. Find below some of the most common reasons why you may be exempt from paying additional stamp duty, or may be entitled for a rebate: 

Multiple Dwellings

When you purchase a second home, you will need to pay an additional 3% in stamp duty on top of the revised rates for each band. However, if you sell your main residence within three years of completing a new home, you may be refunded this 3% surcharge.

This is because once your first property has been sold, your second property ceases to be additional and will become your main place of residence. Consequently, the stamp tax you paid as such will be considered as overpay, and thus valid for a refund. 

First Time Buyers

You can claim this relief if you are buying a residential property for the first time. However, this relief does not apply if the purchase price is more than £425,000.

Local Authorities Making a Compulsory Purchase 

When a local authority makes a compulsory purchase of a property from the owner in order to sell to a third party for development, stamp duty may be valid for refund. For example, the local authority can get a relief from stamp duty when it buys a necessary property.

Property Developers Subject to Planning Obligations

Property developers subject to planning obligations such as schools can claim relief from stamp duty on the first purchase of the property from the original owner before transferring the finished building to the local authority.

Charities

Charities can get relief from stamp duty when they buy properties for charitable purposes.

Non-UK Crown Employees 

There is a relief from the usual 2% surcharge on top of the stamp duty rates for crown employees who are non-UK residents but have bought a residential property in England or Northern Ireland. This relief also applies to their spouse or civil partner, provided they are not separated.

Freeport Tax Sites

You can claim this relief if you are buying any land or buildings in a designated freeport tax site, but only if the land or building will be used in a qualifying way.

Employer Buys Employee’s House

If an employer buys an employee’s house because the employee is relocating or moving due to their work, a refund can be claimed.

To reclaim an overpayment from HMRC the deadline is usually 12 months and 14 days from when you paid the stamp duty. In extremely limited circumstances that deadline can be extended up to 4 years and 14 days. 

If you are too late to claim the repayment from HMRC you can bring a court claim against a professional advisor if their advice or work was negligent and it caused you to overpay.

How Long Does a Stamp Duty Refund Take? 

There are two 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 or you may claim against your conveyancer or estate agent, or perhaps even through a company specialising in stamp duty rebates

If you claim against your conveyancer or estate agent, 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. 

However, some people opt for help through companies to ease the process. This may also be a viable option if you are unsure if your claim is valid or if you are unsure of the loopholes or exemptions of stamp duty that may apply

Generally, HMRC will aim to process the repayment within 15 working days of the date it receives a complete account of the above information. If HMRC believes that there is any missing information, then this may cause a delay in your refund. Thus, it is important to act fast when it comes to filing for a stamp duty refund. The sooner you do, the more likely you’ll be successful in making a claim.