A recent story reported that HMRC has handed back £127m in Stamp Duty Land Tax (SDLT) charges. Despite the daunting headline, these claims are perfectly legitimate and apply to anyone who has sold their main residence at some point after buying a replacement.
In April 2016 an additional SDLT surcharge was introduced to all buy-to-let property purchases, as a way of levelling the playing field between investors and first time buyers. However, some homeowners find themselves caught out by the tax. Those who purchase residential property to replace their main home, but keep hold of their previous property, to for example carry out maintenance works or wait for a sale to come through, are being caught by the additional 3% charge.
It applies because, even though the main residence is being replaced, these homeowners are for some reason unable to sell at the same time as the purchase of the additional property. This leaves many people with a large bill for SDLT – even though they are likely to be eligible for relief.
As long as it is the main residence that is being replaced, and is a not a buy to let purchase, the SDLT surcharge can be reclaimed under replacement residence relief. Those already doing this have benefitted from HMRC’s £127m refunds, with an average claim worth around £11,000 and the daily refund amount hitting £265,000.
In order to qualify for an SDLT refund, homeowners replacing their main residence have three years to sell their previous home. The time limit for when a claim can be made by is either:
If you are involved in any recent property purchases, and you think you might be eligible for the tax relief, then you might want to follow a few tips:
You can find out more information about how to make a claim here. If the rules are not adhered to, there are significant consequences and hefty fines for those who do not comply.
You can also apply for the relief if you sell your old home, whilst already owning other investment properties, but purchase a new one at a later date – as long as you are replacing your main residence. Look out for more on this later, as I will write about this topic in more detail.
Circumstances will differ according to individual circumstances, so for more tailored advice that is suited to your needs, we would recommend seeking professional advice from the tax team at Wilkins Kennedy. Contact us today to see how we can help.
Business Property Relief (BPR) is a very valuable Inheritance Tax (IHT) relief for privately owned businesses and was subject to a recent review by the Office for Tax Simplification (OTS). This Insight highlights some key points to qualify for the relief.
HMRC has announced a one year delay on the implementation of VAT reverse charge to 1 October 2020. Whilst this is good news for construction businesses who were not yet prepared, it may cause additional work for those businesses who were ready to go.
Introduction of the reverse charge for construction services has been delayed and now takes effect from 1 October 2020. A business supplying goods or services is normally required to charge VAT and declare this to HMRC. However, with some UK specified supplies, the supplier does not charge and collect VAT on the supply. Instead, the customer is required to account for output tax to HMRC. This VAT is recoverable, subject to the normal rules and the mechanism is called the reverse charge.
On 1 April 2013, the government introduced the Annual Tax on Enveloped Dwellings.
In his speech yesterday, Chancellor Philip Hammond demonstrated his commitment to the principle of the Spring Statement as a low-key event, at least in terms of tax and public spending announcements.
If you inherit property, there is usually no Stamp Duty Land Tax (SDLT), unless the beneficiary is paying money into the estate or paying other beneficiaries. However, there are an increasing number of people getting caught up in an SDLT ‘trap’ when circumstances relating to the inherited property change.
Last year, the Treasury collected more than £5 billion in inheritance tax (IHT), which as a percentage of the total tax receipts, puts IHT at one of the highest levels it has been since the early 1980s. Giving some thought to tax planning can help relieve the sting from the taxman.