Landlords with annexes could have overpaid stamp taxes

According to the new findings, a quarter (25%) of British landlords with annexes may have overpaid stamp duty. Some 10,000 homeowners with annexes on their properties were reportedly not informed that they could have paid less stamp duty at the point of purchase.

Recently, properties with an annex have become a popular choice with buyers looking for a location with long-term flexibility.

A lesser-known benefit of owning a property with a self-contained annex is that you could be eligible for multiple home reliefs, which means you could pay a reduced stamp duty fee.

The stamp duty cost home buyers £13bn a year collectively before the holidays. It has been estimated that the landlords overpaid £3 billion in 2015/16 due to errors in advice and complicated rules.

Stamp duty is a poorly understood tax. With the nine-month holiday scheduled to end in March 2021, this confusion among home buyers about the ever-changing nature of the SDLT is likely to increase, according to David Hannah of Cornerstone Tax.

However, new findings from Cornerstone Tax found that 25% of homeowners in Britain who have an annex on their property were not informed that they could have paid a reduced rate of stamp duty on their property at the point of shopping.

This often results in landlords being owed tens of thousands of pounds in stamp duty refunds.

“Millions of UK properties qualify for reduced taxes.”

David Hannah, Principal Consultant and Founder of Cornerstone Tax, said: “This investigation demonstrates a lack of clarity in and around the stamp property tax, both by the public and the legal sector.”

“Millions of properties across the UK could qualify for reduced stamp duty rates if, for example, they have a separate side annex as part of the property. In these cases, attorneys must inform their clients of all possible stamp duty reductions, including where Multiple Home Assistance is available.”

“The mistakes that are made are in almost all cases, involuntary and are made for fear of paying less. Most legal professionals are ill-equipped to navigate the complex rules that surround you and need help.”

“The law on SDLT is incredibly complex, and many assessors who help home buyers assess how much they must pay are trained only to differentiate between residential and commercial properties.”

“They are not familiar with the complexities of the law’s evaluation criteria, which has led to many being inadvertently misinformed. There are other reasons why people have overpaid; it is not always a misinterpretation of the 3% surcharge.”

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