It is surprising how many property solicitors are not au fait with the Stamp Duty Land Tax (SDLT) rules. There are several reliefs and exemptions which can apply to a property purchase and it is becoming increasingly clear that many buyer’s solicitors do not understand how effectively and legally to reduce their client’s SDLT liability.
Although the starting point is that most property will be assessed as residential property for SDLT, if there is a non-residential element to the purchase then the whole purchase price will be assessed to SDLT at a significantly lower rate. As an example, I was recently instructed by a client who had purchased a property last year through another firm of solicitors at a purchase price of £2,400,000. She paid SDLT of £201,750. However her solicitors failed to take into account that the property was not simply a residential house with gardens but a farm (the clue was in the name!) with a substantial acreage and seventeen loose-boxes which were let as a Livery Yard. The property therefore qualified as being non-residential and the SDLT that should have been paid on completion of the purchase was £109,500 which meant that the client had overpaid SDLT by £92,250. I was able to reclaim this for her in full from HMRC.

In another case, I was selling a property for a client which consisted of a manor house, a lodge house, a flat over the garage and some fifty odd acres. The property had been on the market for some time and had failed to sell but a couple from London fell in love with the property and were very keen to proceed. However they had a limited budget and so to procure the sale my client agreed to keep the majority of the land and include only about five acres in the sale. The budget of the buyers included the cost of professional fees and SDLT. The buyer’s solicitors calculated (at the full residential rate) that the SDLT payable on the transaction amounted to £261,750 which meant that this exceeded their client’s budget and they could not proceed. However, I could show the buyer’s solicitors that they could take advantage of multiple dwelling relief and reduce the SDLT liability by £80,502. This was then well within the buyer’s budget and the sale proceeded to everybody’s satisfaction.

Please contact me if you think you have paid too much SDLT?