HMRC refunds £127m on Stamp Duty surcharge

HMRC has refunded £127m in Stamp Duty for second home owners since the 3% surcharge was introduced in April last year.

The average refund over 10,700 property purchases was roughly £11,869.

Currently if you purchase your new main residence, but have not yet sold your old one you will have to pay the 3% surcharge on Stamp Duty for second homes. However, if you then sell your old main residence property within 3 years the surcharge will be refunded regardless of how many other properties you may own.

Where it is complicated to understand is in the event of one partner in a joint purchase already owning a property and the other party being a first time buyer, or if you already own a BTL and not a main residence and then buy one. The rule of thumb is that if the purchasers together end up with more than one property then the additional surcharge will be payable. Please see diagram below, but ignore the 18month refund term as it is now 3 years.

£80m of the refunds were paid back in the 2016/17 tax year and so far a further £47m this year. In total HMRC received £8.6 billion in Stamp Duty Revenue last year of which £1.7 billion was from the surcharge for second homes.

The original Government consultation document on the Stamp Duty surcharge is a great resource to use with many different examples of when the charge will apply and we have used it many times to help answer readers questions so please do check out it out by clicking on >> Higher rates of Stamp Duty Land Tax (SDLT) on purchases of additional residential properties