Over the past few years, there have been some interesting opportunities for making claims for Stamp Duty Land Tax (SDLT) refund claims. It should be noted that to be successful, these claims must meet quite specific criteria. For example, there may be scope for landlords and property investors to recover the 3% SDLT surcharge on the basis that a residential property was uninhabitable at the time of purchase. This could be because the home had no kitchen, bathroom, heating or was missing a roof. There is also the possibility of claiming Multiple Dwellings Relief (MDR) where multiple residential properties were bought as part of a linked transaction. 

HMRC has published a press release warning homeowners about cold calls from rogue tax repayment agents advising them to make speculative SDLT refund claims. HMRC is likely to raise enquiries on these claims. If this is after the agent has taken their fee, the homeowner may be liable to pick up the difference. Incorrect refund claims must be repaid with interest, and potentially facing penalties.

HMRC has nine months to enquire into a claim and would look to recover the full tax, with interest, and penalties charged where appropriate from those found to be incorrect. 

We would strongly recommend that anyone interested in receiving further information about making a claim or who are contacted ‘out of the blue’ about a Stamp Duty refund claim should seek our advice. Interestingly, HMRC give the same advice in their press release suggesting ‘anyone approached about a Stamp Duty refund claim should check with their original conveyancer, take independent professional advice and check HMRC’s guidance by searching ‘Stamp Duty Land Tax’ on GOV.UK.

The Welsh government has announced that it is increasing the maximum amount that local authorities can charge as a council tax premium on second homes and long-term empty properties from 100% to 300%. The new policy is set to come into effect from April 2023 and will enable councils to decide the level which is appropriate for their individual local circumstances. The government has also said that councils will be able to apply different premiums to second homes and long-term empty dwellings.

The government said that it is introducing this change to help councils raise additional funding which will ideally be used to improve the supply of affordable housing.

The Welsh government will also change the criteria for self-catering accommodation being liable for business rates, instead of council tax, from April 2023. Currently, properties that are available to let for at least 140 days, and that are actually let for at least 70 days, will pay rates rather than council tax. The change will increase these thresholds to being available to let for at least 252 days and actually let for at least 182 days in any 12-month period.

Government figures show there were almost 24,000 chargeable second homes in Wales registered for council tax purposes in January 2022. Most local authorities no longer give any discounts to long-term empty or second homes.

Stamp Duty Land Tax (SDLT) is a tax that is generally payable on the purchase or transfer of land and property in England and Northern Ireland. It is also payable in respect of certain lease premiums. You may also need to pay SDLT when all or part of an interest in land or property is transferred to you and you give anything of monetary value in exchange.

There are important issues to consider if you transfer land or property between unmarried couples and other joint owners. HMRC’s guidance on the subject states as follows:

You do not pay SDLT if 2 or more people jointly own property (as joint tenants or tenants in common) and you divide it physically and equally and own each part separately. But, if one person takes a bigger share, or all of the other’s share, and pays cash or some other consideration in exchange, you must tell HMRC. If the amount you pay is more than the current threshold, you will pay SDLT.

Joint owners (this may include unmarried couples who are splitting up) may agree that one of them will take over ownership of a property they bought together, including any outstanding mortgage.

In this case the person taking ownership will pay SDLT on the total chargeable consideration of the following (either or both), if it exceeds the SDLT threshold:

• any cash payment that one of the couple makes to the other for their share
• the proportion of the outstanding mortgage that belongs to the share of the property being transferred

Stamp Duty Land Tax (SDLT) is a tax that is generally payable on the purchase or transfer of land and property in England, and Northern Ireland. Wales and Scotland set their own Stamp Duty taxes. It is also payable in respect of certain lease premiums. You may also need to pay SDLT when all or part of an interest in land or property is transferred to you and you give anything of monetary value in exchange.

There are important issues to be aware of if you transfer land or property to a company. HMRC’s guidance on the subject states as follows:

When property is transferred to a company, SDLT may be payable on its market value, not the consideration given. For example, if a property has a market value of £200,000 but the company only pays a consideration of £100,000, SDLT will still be payable on £200,000.

This applies in either of the following situations, the:

• person who transfers the property is ‘connected’ with the company – the definition of a connected person covers relatives and people who have some involvement with the company,
• company pays for the property with shares in the company (partly or wholly) to the person making the transfer, where that person is connected to the company (but not necessarily the acquiring company).

Holding properties within a limited company can have many advantages such as lower Corporation Tax rates and tax relief on interest payments. However, it is important to be aware of issues that can arise including the payment of SDLT or regional equivalents.

If you are considering transferring property to a company, please take professional advice before completing the transaction.

The Annual Tax on Enveloped Dwellings (ATED) is a tax payable by certain Non-Natural Persons (NNPs) that own interests in dwellings valued at more than £500,000. These provisions affect certain companies, partnerships with company members and managers of collective investment schemes described in the legislation as NNPs.

To value a property, you can use a professional valuer or determine your own valuation. The valuation of the property must be in pounds sterling. Valuations must be on an open-market willing buyer, willing seller basis and be a specific amount.

The valuation date depends on when you owned the property.

The valuation dates are:

• an initial valuation date,
• a revaluation date.

There are fixed revaluation dates for all properties, every 5 years after 1 April 2012, for example on 1 April 2017, 1 April 2022 and so on, regardless of when the property was acquired.

The value of the property for any chargeable period is therefore the later of:

• its initial valuation date,
• the revaluation date.

There is no ATED or ATED-related Capital Gains Tax payable if an individual owns a property directly, rather than through a company. There are also reliefs if a property is used for commercial purposes.