How do I know if the property will qualify for a refund?

• As a developer, if you are not sure whether the property you have bought will qualify for a refund, the following pointer will steer you in the right direction.
• Was the land purchased with the planning permission, which allows the construction and development of residential housing?
• Was the office building purchased with permission for converting into residential housing?
• Was the commercial property purchased along with residential space? Was it bought along with mixed-use land? (Having both commercial and non-commercial elements in the land).
• Are you a first-time buyer purchasing a residential property for no more than £625,000? You may be eligible for First Time Buyers’ Relief by entering the specific code in the Stamp Duty Land Tax return.
• Are you replacing your only or main residence? Lower Stamp Duty rates may apply if you meet the conditions for acquiring a new dwelling to be occupied as your only or main residence.

There are other considerations as well. some are:

Does the property have?

• Community gardens
• Public open areas
• Water pumps or substations
• Woodland or agricultural land
• Forest areas
• Car parks and more

Property obligations of a property developer

The planning authority usually requires the house building company, as a property developer, to provide basic facilities for the community, such as a school or a park, to give planning permission. It is called ‘property planning obligations.’ A property trader, involved in specific types of property purchases, also has distinct SDLT obligations.

Once the developer keeps his side of the obligation by constructing the building or developing the park, he hands over the same to the concerned authorities to run. Suppose the developer buys the property from its original owner. In that case, he is liable to pay SDLT on the property and again when the developer transfers the finished building to the concerned authorities. So, the developer is likely to pay the SDLT twice. To avoid paying the SDLT twice, the developer can claim relief so that the developer need not pay the stamp duty tax on the first sale.

Relief and exemptions for property developers

Developers purchasing residential properties and commercial properties or entirely commercial buildings can avail of SDLT relief. Multiple dwellings relief is a significant benefit, lowering barriers to investing in residential property when a transaction involves a minimum of two dwellings. Mixed-use properties provide the highest tax relief for developers, including non residential properties and non residential property.

If the property has any commercial element, it will be taxed with lower non residential rates of stamp duty. A mixed-use property could include shops, residential buildings with commercial aspects, solar installations, or animal grazing lands. Residential properties costing £500,000 or more, when acquired by non-natural persons, are charged a 15% SDLT rate under the ATED regime. Multiple dwelling properties also offer significant stamp duty savings.

Seeking help from tax consultants and experts

Stamp duty land tax is one of the most complex tax laws that are being continuously amended. As this is a self assessment tax, it becomes quite challenging for taxpayers to calculate their due tax accurately. Moreover, the tax calculator provided by the HMRC on their website acts merely as a general guide. So, it becomes crucial for taxpayers, especially those dealing with commercial properties, to contact solicitors or tax consultants to pay the correct stamp duty tax amount to the HMRC and avail all the reliefs and exemptions provided to them by the law.

Wrapping up

If you think you might have overpaid the stamp duty tax amount or that you are eligible to reclaim the overpaid tax amount, you should contact a reputed and experienced Property Accountants & Tax Expert or a solicitor to help you out with filling and reclaiming the excess amount.