Millions in UK unaware of stamp duty payment mistakes – Cornerstone

An estimated 15 million homebuyers have never considered whether there was a mistake in the stamp duty they paid, according to new research from Cornerstone Tax.

This is despite the tax specialist having previously suggested that mistakes in advice mean around 120,000 people in the UK are owed refunds for just “one of the many issues” with stamp duty advice.

The government’s stamp duty holiday, announced by Rishi Sunak in July, gave homebuyers a break from the tax on property purchases up to the value of £500,000, with the move preceding a record month in property sales during July after lockdown measures started to be lifted.

However, Cornerstone stated that Stamp Duty Land Tax (SDLT) is “poorly understood” and with the holiday due to end in March 2021, the complexities of SDLT will be “no clearer”. The tax specialist described SDLT as complex for homebuyers but also the solicitors and tax advisers employed to make sense of the rules and regulations surrounding the purchase of various types of property.

In 2017/18, over £12.9bn in stamp duty was paid by homebuyers in the UK, while in 2016/17 alone, more than 6,800 additional property refunds totalling £80m were paid – just one “small section” of the market, Cornerstone suggested, due to errors in advice.

Cornerstone research also found that 61% of UK homebuyers, equating to more than 15 million people, said they have never even considered whether there was a mistake in the stamp duty they paid. Another 36% of homebuyers indicated they are mistrusting of the legal sector during property transactions, and have felt ripped off by solicitors when buying and selling property.

“These statistics are shocking, if not wholly surprising, when you consider how many amendments have been made to stamp duty in the past few decades,” said Cornerstone Tax principle consultant and founder, David Hannah.

“While the percentage payment bands at higher property values is fairly straightforward, the number of exemptions and surcharges on different kinds of homes becomes incredibly confusing for even the solicitors and conveyancers advising on these transactions.

“The law around SDLT is incredibly complex and many advisors who help consumers evaluate how much they should pay are trained only to differentiate between residential and commercial property.

“They simply aren’t familiar with the intricacies of the law’s evaluation criteria, which has led to many consumers being mis-advised unintentionally. There are a number of other reasons why people have overpaid; it’s not always a misinterpretation of the 3% surcharge.”

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