Stamp Duty (SD) is a form of tax that you pay when you purchase property or land, however, it is thought that many have overpaid on tax and are due relief through multiple exemptions. The main one is Multiple Dwelling Relief or MDR, as it is usually abbreviated.
Stamp Duty Explained
If you have ever bought and/or sold a property in England, you’ve probably heard of Stamp Duty or if you watch the news you may have heard news presenters talking about the ‘Stamp Duty Holiday’. It is commonly called Stamp Duty however its full name is Stamp Duty Land Tax (SDLT) and only applied to England and Northern Ireland, in Wales, it is known as Land Transaction Tax and in Scotland; Land and Buildings Transaction Tax, both carrying different rates of taxation.
Rates of taxation also vary in England and Northern Ireland, the most basic factors that affect the rate are: If you’re a first-time buyer, a non-UK resident or if you’re buying a second property for example a holiday home. There are a lot of lesser-known factors that are also usually missed by Solicitors and Conveyancers as this is a topic best suited to tax experts. A lack of information online has contributed to missed tax relief as well as the HMRC calculator as this is more of an estimation tool rather than a calculator. Long reply times from HMRC about potential relief is usually missed out as sellers and buyers are usually working to time constraints to finalise sales/purchases.
If you would like to find out more about rates of tax for Stamp Duty you can do so on our more in-depth blog post.
Explaining Multiple Dwelling Relief
Multiple Dwelling Relief was originally brought into action in 2011, the idea was to encourage investment in property and development, with the idea it would encourage the construction of more residential property. In layman’s terms, the taxable amount is calculated on the property by finding the average value of all the dwellings related to the transaction, rather than paying SDLT on the total purchase price of the property. This means you receive SDLT relief on every dwelling rather than paying one lump sum on the whole transaction.
As mentioned above the HMRC calculator works more as a rough guide and therefore many solicitors and buyers miss out on tax relief, some individuals completely unaware that it even exists. MDR comes into play when someone is purchasing multiple dwellings in one go.
What Defines a ‘Dwelling’?
For some context HMRC classes a dwelling as a property (usually an annexe or ‘granny flat’ however, this could be an estate) that is in a habitable state for a human, it must contain certain facilities: a kitchen/cooking area, toilet/bathroom and be suitable for someone to live comfortably in. The guidance also states they must be separable from the main dwelling (it can have a connecting door but it must be lockable), also the utilities should be separate and individually isolated.
The legislation around exemptions is complex, at the date of writing this there are over 40 different exemptions when it comes to paying SDLT, many of these are obscure and normally take a tax expert to spot your exemption. This is why so many people are thought to be owed tax refunds and it is advised to use a tax expert to help you, we see many of our clients trying to do it themselves with HMRC and failing.
Talk To Stamp Duty Returns – Tax Experts
If you’re now thinking that this could relate to you and that you’ve missed out on Multiple Dwelling Relief then get in touch today, sooner rather than later as you can only claim the relief 12 months after the purchase date of the property. We can help you to figure out if you do in fact have grounds to make a claim, as well as this we can help collate the evidence and submit a strong claim for you directly to HMRC explaining why we think the original tax return was calculated wrong, that we can guarantee will see you receive money back.
If you’d like to find out more about Stamp Duty Returns or Contact Us you can do so on our website.