Thousands of homeowners hit with additional stamp duty liability

According to the government’s quarterly stamp duty statistics, the additional 3 per cent Stamp Duty Land Tax (SDLT) charge aimed at people buying second homes or buy-to-let properties raised £2.05 billion stamp duty in 2017.

However, because of delays in selling their old homes, thousands of ordinary homeowners have found themselves liable for the extra 3 per cent SDLT. 

This happens when the former home cannot be sold before the new home is purchased. The new measures aimed at buyers purchasing a second property include a repayment scheme if the first house is sold within three years, but the extra 3 per cent SDLT still has to be paid upfront and reclaimed later.

The figures are substantial. During 2017 more than 15,700 homeowners had to reclaim additional tax totalling £194 million due to delays with the first property sale, increasing the initial cost burden on homeowners before the tax was repaid by HMRC.

George Bull, senior tax partner at RSM, said:

‘The levels of tax revenues generated from the extra 3 per cent SDLT paid on additional properties, such as second homes and buy-to-let properties, will undoubtedly be seen as a win for the Exchequer. 

‘However, it is clearly undesirable that people caught in an expensive bridging transaction, who were never the object of the extra 3 per cent stamp duty charge, should be deprived of monies in this way, and then forced to claim repayment. Due to the levels of unsuspecting homeowners being caught out with additional outlay, we urge HMRC to find a better way of administering this part of the SDLT system.’