You may remember that, back in 2016, the government introduced a Stamp Duty Land Tax surcharge on purchases of additional property. In essence, if you then bought a second home or a buy-to-let property you had to pay 3% extra in SDLT. However, you may not know that – in certain circumstances – it’s possible to claim back Stamp Duty that you paid as far back as January 2017. In this article we take a look at how Stamp Duty applies to additional properties and explain how you may be able to reclaim it.
How much Stamp Duty do I pay on additional properties?
The table below shows how much Stamp Duty you pay when buying a property. As you can see, if you buy an additional property to your main home, you pay an extra 3%.
|Property value||Main home rate||Additional home rate|
|£0 – £250,000||Zero||3%|
|Slice from £250,001 to £925,000||5%||8%|
|Slice from £925,001 to £1.5 million||10%||13%|
|Slice above £1.5 million||12%||15%|
It’s also worth noting that the rates were slightly different before 23rd September 2022. Before then, the zero rate for main homes applied only to properties worth up to £125,000, while 2% was payable on the slice from £125,001 and £250,000. For additional properties, the rates for those slices were therefore 3% and 5% respectively.
An example of how much SDLT you’d pay
Imagine you bought an additional property for £2 million. You would pay the following amount of Stamp Duty.
- 3% on the first £250,000 (£7,500)
- 8% on the next £675,000 (£54,000)
- 13% on the next £575,000 (£74,750)
- 15% on the remaining £500,000 (£75,000)
- TOTAL SDLT = £211,250 (effective tax rate of 10.56%)
As you can see, SDLT can rack up pretty quickly, so if you are able to claim back Stamp Duty it could be very worthwhile.
When can I claim back Stamp Duty?
If you bought an additional home, you may be able to get a refund of the Stamp Duty surcharge if you then sell your main residence and move into the second property. In other words, if you replace your original main residence with the additional home you’ve bought.
People may do this for a number of reasons. For example, they might want to renovate the second property before moving in. Or they may have had trouble selling their main residence.
How long do I have to claim?
Normally you have up to three years to claim back SDLT after completing on the additional property. However, in some circumstances you can get a refund on property purchases that took place more than three years ago, but after 1st January 2017. You can do this if there were good reasons you couldn’t sell your main residence within the three-year time period. A good example would be failing to sell your home because of the coronavirus pandemic. If you think you have a good reason, you’ll need to write to HMRC, which will decide whether you can get a refund.
How do I claim back Stamp Duty?
If you think you are eligible to claim back the Stamp Duty surcharge on an additional property, you can do it online. You’ll need to provide HMRC with quite a lot of detailed information, so it’s worth checking what you need beforehand.
You need to apply within 12 months of selling your original main residence, or within a year of filing the return relating to the new residence (whichever is later).
If you have bought an additional residence and subsequently sold your main home, it’s definitely worth checking to see if you can claim back the Stamp Duty surcharge. If you’d like any assistance with your application, get in touch with one of our accountants. They’d be delighted to help you.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.