Sec­ond home stamp duty re­funds run­ning at £10m a month

The Daily Telegraph - Your Money - - FRONT PAGE - Sam Mead­ows

HM Rev­enue & Cus­toms is hand­ing back £10m a month to home­buy­ers who were wrongly charged the sec­ond home stamp duty “sur­charge”.

Fig­ures re­leased this week show the tax­man has re­turned a to­tal of £185m to more than 15,000 buy­ers in the 18 months since the in­tro­duc­tion of com­plex new rules de­signed to slow the buy-to-let mar­ket. Since April 2016, any­one buy­ing an ad­di­tional prop­erty is sub­ject to a 3 per­cent­age point sur­charge on top of reg­u­lar stamp duty. But the way the rules are drafted means they draw in those who move from their main home to another new, main home, be­fore the pre­vi­ous one is sold. Th­ese peo­ple must pay the sur­charge, which can make up more than half the over­all tax bill, and later claim a re­fund from the tax­man. The process has been crit­i­cised as la­bo­ri­ous and un­nec­es­sary.

Nimesh Shah, a part­ner at Blick Rothen­berg, the ac­coun­tants, said: “Th­ese fig­ures show peo­ple are be­com­ing more aware they can claim a re­fund. The sur­charge came in a year-and-a-half ago, so we are get­ting to that stage in the process. It takes time to get an of­fer ac­cepted, buy a prop­erty and then claim a re­fund.” But he said it was un­fair that buy­ers were be­ing forced to fork out thou­sands in tax up front, only to claim it back a mat­ter of weeks later.

The sur­charge el­e­ment can make a huge dif­fer­ence to the bill: a prop­erty worth £500,000 is li­able for £15,000 stamp duty, but the same prop­erty pur­chased with the sur­charge would be li­able for twice that at £30,000.

“You don’t want to have to find that ex­tra cash and peo­ple could be forced to bor­row from fam­ily,” Mr Shah added.

Ju­lian Jes­sop, chief econ­o­mist at the In­sti­tute of Eco­nomic Af­fairs, said the amount paid in re­funds was rel­a­tively small com­pared with the to­tal amount of tax bought in. But he said it was a sign of the “com­plex­ity” of the sys­tem.

In to­tal, HMRC took in a record £2.6bn in res­i­den­tial stamp duty in the past three months, as well as another £900m in non-res­i­den­tial. This is 23pc higher than in the same pe­riod last year.

Chan­cel­lor Philip Ham­mond is un­der pres­sure to ad­dress the stamp duty regime in this month’s Bud­get. Mr Jes­sop said: “When you sell your house you end up giv­ing a big chunk on the value to the tax­man, so peo­ple are more likely to stay put. This tends to mean peo­ple stay in big­ger houses than they need so it con­trib­utes to the hous­ing cri­sis.”

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