SDLT relief and refunds
SDLT relief represents a complex and ever-shifting topic. This tax has been subject to more alterations since its inception in 2003 than any other comparable tax. The rules governing it are full of exceptions, exemptions and many SDLT reliefs are available. Not all SDLT reliefs are obvious which can cause problems for lawyers who are generally inclined to differentiate simply between a whether a property is residential or commercial for SDLT. This is made worse mainly thanks to lack of help from HMRC and conflicting messages from their regulator, the SRA. Mistakes can result in significant SDLT refunds.
As a result people buying property with land, outbuildings, woodland or separate annexes, may find themselves paying a higher SDLT bill on their purchase than they should. If this happens to you do not panic we can advise you on the correct position and if a stamp duty land tax refund is available we can guide you through the process.
Why are SDLT reliefs so complex?
Many accountants are not tax expert
Clients tend to be over reliant on their accountant for all tax matters. The complexity of the tax system means that most accountants are no longer experts in tax and specialist tax advice should be sought.
Solicitors unsupported
Solicitors, lawyers and agents are not tax specialists, and yet in many cases can become liable in cases where they have made incorrect assumptions regarding a property and the SDLT position which leads to incorrect filings and payments being made.
Tax changes
SDLT legislation has been subject to multiple changes, most recently in July 2016. The full range of changes have significally complicated the application of this tax and led to widespread confusion.
What SDLT reliefs are available?
Land
If your property has land that has a non-residential element to it, it’s likely you can qualify for “mixed-use” SDLT rates and potentially save thousands. Examples might be the lease of the land or buildings, farming use, title restrictions on the use for residential purposes.
Annex
Does your property have a ‘granny annex’ or separate living accommodation? You could qualify for “multiple dwellings” tax relief.
Outbuildings
You may qualify for multiple dwellings tax relief or mixed-use which could substantially reduce the applicable SDLT rates and save significant tax.
Woodlands and orchards
Where woodland or orchards are parcelled up in the same transaction alongside a residential property, it may be argued the purchase is “mixed-use” resulting in lower rates of SDLT being applied and significant savings being achieved.
Six or more residential properties
If you have 6 or more residential properties as part of one transaction, there may be a choice between multiple dwellings relief and commercial rates of SDLT.
