How to claim a stamp duty refund

The replacement main residence refund

This is the big one and it accounts for most legitimate claims. If you buy a new home before selling your existing one, you own two dwellings on the day of completion, so the additional property surcharge applies. On a £400,000 house that is £20,000 of tax you should not ultimately bear.

Once the old home sells, you reclaim it. The conditions are that the property you sold was your only or main residence at some point in the 3 years before the new purchase, that you lived in the new property as your main residence, and that the sale happens within 3 years of the new purchase.

The deadline is where people lose the money. You must claim within 12 months of the sale of the old home, or within 12 months of the filing date of the original return, whichever falls later. HMRC has no general power to extend this, and appeals based on not knowing about the rule do not succeed. If you bought a new home before selling the old one at any point in the last few years, check this today rather than at some point.

Missed first time buyer relief

First time buyer relief is claimed on the return itself, so if it was not claimed at the time, no one comes back and applies it later. It gets missed where the buyer did not realise they qualified, where a shared ownership purchase was handled on the wrong basis, or where the conveyancer simply applied standard rates.

The return can normally be amended within 12 months of the filing date. Beyond that an overpayment relief claim is sometimes possible up to 4 years from the end of the relevant period, though the grounds are narrower. Either way it is worth checking any purchase under £500,000 where you were buying your first home.

Mixed use and non residential claims

Where a purchase genuinely includes a commercial element, non residential rates apply to the whole transaction and the surcharge does not. A shop with a flat above, a house sold with land under a grazing licence to a working farmer, or a property with a self contained office let on a commercial lease can all qualify.

These claims can be worth a great deal, but they are also the area where HMRC pushes back hardest. A genuine claim needs real evidence such as a commercial lease in place at the time of purchase, business rates on the commercial part, or an agricultural tenancy. A paddock the family pony grazes on is not a commercial element. If a claim fails you repay the tax with interest and often a penalty, so weak claims are worse than no claim at all.

Uninhabitable property claims

You may have been approached about claiming that a property was not suitable for use as a dwelling on the day of purchase, which would put it into the non residential rates. Genuine cases exist, typically where a building is structurally dangerous, has no functioning services and cannot be occupied without major reconstruction.

The tribunals have taken a firm line here. A property needing a new kitchen, rewiring, damp treatment or a full refurbishment is still a dwelling. The test is whether it is suitable for use as a dwelling, not whether anyone would want to live in it as it stands. Most of the claims sold on this basis fail, and the buyer is left repaying the refund with interest years later.

The claims firms problem

A whole industry has grown up around stamp duty refunds, usually working on a percentage of whatever is recovered. Some of it is legitimate. A good deal of it is not, and HMRC has repeatedly warned about firms making speculative claims on behalf of buyers who then carry the risk.

The points worth understanding are these. HMRC often pays refund claims quickly without checking them, which makes a claim look successful when it has simply not been examined yet. The enquiry window can stay open for years afterwards. When a claim is later rejected, the liability sits with you, not with the firm that made it, and by then the firm may have taken its fee or ceased to exist. Any refund you are entitled to can be claimed directly, at no cost beyond your adviser's normal fee.

Other situations worth checking

Refunds also arise where the chargeable consideration was overstated, for example where fixtures and fittings were included in the price without being properly apportioned, or where a linked transaction was treated incorrectly. They arise where an annexe was wrongly treated as a second dwelling instead of qualifying as subsidiary. They arise where a non resident buyer paid the 2% surcharge and then spent enough days in the United Kingdom to become resident, which allows the surcharge to be reclaimed.

They also arise where lease premiums and net present value calculations have been done incorrectly on commercial leases, which is common because the calculation is fiddly and rarely checked.

How the claim is made

For England and Northern Ireland, an amendment to the original return is made to HMRC in writing or through the online service, quoting the unique transaction reference number from the original submission. You need the completion statements for both properties, the original return and evidence of the dates.

Scotland and Wales have their own processes through Revenue Scotland and the Welsh Revenue Authority, with broadly similar time limits, though the Scottish rules on the Additional Dwelling Supplement have their own conditions. Refunds usually arrive within a few weeks of a straightforward claim.

Frequently asked questions