Property Tax Advice

What is Stamp Duty Land Tax (SDLT)? 

In most cases, you will pay SDLT when you purchase a property in England and Northern Ireland. It applies to both freehold and leasehold properties and the amount of tax you pay will depend on the amount of consideration you pay for the property. In addition, a further charge to SDLT may be due if you already own an additional residential property worldwide (5% surcharge) or you are not a UK resident (2% surcharge). Please note that the rate of tax will differ if you buy a property in Scotland (under Land and Building Transaction Tax – LBTT) or Wales (under Land Transaction Tax - LTT). 

What type of SDLT reliefs are there? 

There are 50 different types of SDLT reliefs available in total and are dependent on the parties involved as well as the type of property being purchased. The most common reliefs will apply to mixed use property, uninhabitable property, transactions involving partnerships and acquisitions by property traders and developers. 

Am I eligible? 

It depends on the type of property you are purchasing and the parties involved in the transaction. Our highly trained tax analysts will review the finer details surrounding the transaction and will be able to determine whether any reliefs are available to you. 

What do I need to provide? 

To review the transaction, we will require details such as the purchase price, contract/lease (if available), sales brochure, floor and site plans, and some background information on your position as a buyer such as whether you are UK resident or not, whether you own any other properties worldwide and whether you are connected to the vendor or not. 

How much do I save? 

This will vary on the nature of the relief applied, the type of property being purchased and your status as a buyer. For example, SDLT is charged at a cumulative rate and will reach a maximum rate of 12% for all residential property (in England and Northern Ireland) valued above £1,500,000. If you already own an additional residential property and you are not disposing of your current main residence to live in the new property being purchased, there will be a surcharge of 5% due on your purchase, bringing this rate up to 17% (12% + 5%). In addition, if you are not UK resident there will be a further surcharge of 2% to pay, bringing this up to a maximum rate of 19% (17% + 2%). With our most commonly used relief, this being mixed use, we are able to get the rate of SDLT down to 5% leading to a significant SDLT saving of 14%. 

How long does the process take? 

So long as we have all the details to hand and can confirm that relief is available to you, we are able to issue the advice as soon as our terms of engagement have been signed. We aim to meet your needs and provide the advice as soon as possible to ensure the conveyancing process is as smooth as possible. We are also happy to discuss the matter with your solicitor and provide them with instructions on how to complete the SDLT1 Return to claim the relief when submitting the return to HMRC. The return must be submitted within 14 days from the date of completion and if you have already completed but have yet to submit the return, we are still able to provide the advice within this timeframe to ensure that you are able to claim the relief and pay a lower amount of SDLT from the outset. 

How many years back can I ask for a refund? 

In most cases, following completion you are able to go back up to 12 months and 14 days and apply for a refund from HMRC. However, there are certain scenarios where you may go back up to 4 years from completion and undergo the same process. As stated above, our highly trained tax analysts would need to review the full facts surrounding the transaction in order to determine this and confirm the amount you are entitled to reclaim. 

What stage of the buying process do you come in? 

We are able to assist at either end of your transaction. In an ideal scenario we would be informed about the transaction well in advance and have an abundance of time to advise you on how to utilise the reliefs available to you in order to reduce your SDLT liability from the outset. However, this is not always the case and in the past year we have operated 60% of our business by providing advice to buyers prior to completion. If we are notified about the transaction after completion, we will then look to review the details and reclaim any overpaid SDLT from HMRC, which makes up the remaining 40% of our business. As stated above, we may go back up to a maximum of 4 years from the date of completion in order to reclaim any overpaid SDLT from HMRC. 

What is the cost of your service? 

We are able to work on both an advisory or reclaim basis. For advisory work, we charge 20% of the tax saving plus VAT. This will include written advice on the matter to confirm the SDLT position, HMRC enquiry costs cover and defence of any appeal up to the First Tier Tax Tribunal if necessary. For reclaims, we operate on a no-win no-fee basis. Our fee is again 20% of the tax saving plus VAT however, our fee will only become payable once the tax has been recovered from HMRC. What is your success rate? We have a 93% success rate with HMRC whereby the majority of our cases remain unchallenged. For the remaining 7%, this is a mixture of where HMRC have raised an enquiry into some matters, whereby we disclose all of the facts surrounding the transaction with the aim of closing the enquiry as soon as possible, and some matters that are still inside the 9-month window for HMRC to raise an enquiry. 

Does this comply with HMRC guidelines? 

Correct, we work within the parameters of the tax legislation and we will only provide advice on cases where relief is applicable. We have been applying these reliefs for several years and will often obtain agreement from HMRC to confirm that the relief is available in your scenario. 

Are these tax schemes? 

No, the advice we provide is based on tax legislation and we do not deviate from this. It is also backed by tax counsel where necessary or if requested (at the clients expense). 

Will I have to pay the money back if HMRC ask for it? 

This will depend on the scenario. If HMRC have concluded their enquiry process and determined that the relief didn’t actually apply in the first instance, we will need to review the facts. If we feel that HMRC are wrong in their assessment, we are prepared to challenge and correct them at the First Tier Tribunal if necessary. However, if it appears they are right, we would need to understand why. If this was due to our negligence, we would repay our fee back to you and you would then pay the tax benefit received back to HMRC. However, if this was due to information being withheld/not disclosed by you from the outset which would have jeopardised the advice or application for a refund, our fee would not be refunded and you would have to repay the tax benefit back to HMRC. 

What’s the catch? 

We are completely transparent about our advice and are happy to explain the details surrounding the relief before you agree to proceed with us. We are also happy to speak with your solicitor to ensure that they understand the advice and are fully on board when submitting the return to HRMC. The reliefs we apply are all in line within the legislation and we can provide multiple cases studies identical to your scenario where we have successfully applied these reliefs in the past.