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HMRC issues record stamp duty refunds for second homes in Q4

  • 04/02/2020
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HMRC issues record stamp duty refunds for second homes in Q4
HMRC has banked £3.3bn from stamp duty receipts in the last three months of the year, in line with Q4 2018, despite refunding a record amount of overpayments.

In total, 314,700 transactions took place in Q4 of which 285,700 were home purchases. Stamp duty receipts for home purchases reached £2.3bn, also on a par with the previous year’s quarterly takings.

However, 11,100 refunds valued at £155m were issued to buyers who had been charged the additional homes levy of three per cent for a buying a new home before selling their old property. If buyers sell their original main residence within three years of the purchase they can claim the stamp duty back. The three per cent additional homes tax was introduced in April 2016.

During previous quarters in the year, refund levels have not exceeded 6,500 transactions.

Just over £400m of stamp duty receipts were collected through the three per cent higher stamp duty rate in Q4.

John Shallcross, Stamp Duty Land Tax specialist at Blake Morgan, said: “A possible explanation for the spike in refunds is because the revenue has been catching up with its requests. They started hitting their 15-day target in October 2019, before that refunds had been taking a lot longer.”

Shallcross said the HMRC said it was now processing 90 per cent of its refund claims within the target and had moved staff from different departments to get up to date with the back log.

Mortgage Solutions has contacted HMRC for comment.

Some 62,800 purchasers claimed first-time buyers’ relief in the quarter, making a total of 464,700 claims since the relief’s introduction in November 2017. The estimated total amount relieved over that period is £1.1bn.

First-time buyer’s relief applies to purchases of homes for £500,000 or less provided the buyer has never owned a home before and it is their main residence. Homes valued at £300,000 or less carry no stamp duty liability. Transactions valued at more than £300,000 but less than £500,000 are subject to a five per cent tax charge.

Shaun Church, director at Private Finance, said: “Almost half a million first-time buyers have taken advantage of this tax break since introduction. With a stamp duty bill typically amounting to tens of thousands, many of these first-time buyers would have been unable to achieve their homeownership dream had it not been for this tax relief.

“With the Budget just around the corner, pressure will be mounting on the chancellor to turn his attention back to stamp duty, but this time for those further up the property ladder.

“The government desperately needs to start incentivising downsizing, the UK’s older generations are stuck in homes that are too large for their needs, but too expensive to give up. Offering last-time buyers a stamp duty exemption on their new smaller home would encourage them to downsize, freeing up the ‘forever’ homes desperately sought after by younger families.”

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