“The number of exemptions and surcharges on different types of homes is becoming incredibly confusing, even for the lawyers and transportation agents who advise these transactions.”
Rishi Sunak’s stamp duty holiday, announced in July, has allowed homebuyers to evade property purchase tax of up to £ 500,000. The holidays are believed to be a contributing factor in what was a record month for real estate sales in July after foreclosure measures began to be lifted.
In more normal times, however, Cornerstone Tax research reveals that stamp duty is a misunderstood tax.
Research shows that 15 million home buyers never even considered if there was an error in the stamp duty they paid. This despite the fact that Cornerstone estimates that advice errors mean that around 120,000 people in the UK have to be reimbursed for just one of the many problems with stamp duty advice.
In 2017/18, over £ 12.9 billion in stamp duty was paid by UK homebuyers, while in 2016/17 alone, over 6,800 additional property refunds totaling 80 million pounds have been paid – just a small part of the deal, due to board errors. It has been estimated that over £ 3 billion was overpaid in stamp duty in 2015/16.
The Cornerstone survey found that 61% of homebuyers never considered if there was an error in the stamp duty they paid.
36% of Britons are suspicious of the legal sector in real estate transactions and have felt ripped off by lawyers when buying and selling property, while 13% say they feel they have been pressured into paying too much stamp duty by mistake because of their lawyer – the equivalent of 2,693,000 households.
14% of homeowners say they were forced to take out short-term loans or emergency credit to cover the cost of unscheduled stamp duty payments, the equivalent of 1,926,000 people nationwide.
52% said there should be an independent office to audit stamp duty transactions to make sure people are paying the correct amount.
David Hannah, Principal Consultant and Founder of Cornerstone Tax, said: “These statistics are shocking, if not totally surprising, considering the number of changes made to the stamp duty over the past decades. While the payout percentage ranges for higher real estate values are fairly straightforward, the number of exemptions and surcharges on different types of homes becomes incredibly confusing, even for attorneys and transport agents who advise these transactions.
“The law around SDLT is incredibly complex and many advisers who help consumers assess how much to pay are only trained to differentiate between residential and commercial properties.
“They just don’t know the intricacies of the law’s assessment criteria, which has led to many consumers being inadvertently misguided. There are a number of other reasons why people overpay; . “