Stamp duty errors cost owners £2bn
In the past year than one-third of property transactions fell through, according to the inaugural Home Movers Report from Smoove. The report also found that just over half of homeowners said they were unlikely to move again within the next five years due to the stressful process and unforeseen additional costs.
Homeowners spent on average £1,640 on unexpected costs, including stamp duty fees.
More than four million homes have been pushed into a higher stamp duty bracket compared to March 2020 due to house price rises. Of those, 28 per cent have moved above the initial £125,000 stamp duty threshold, according to data from Zoopla.
Tax experts Cornerstone Tax reports that stamp duty is often overlooked but is something that must be meticulously calculated. It found that 13 per cent of Brits believed they paid too much stamp duty in error while 61 per cent of homebuyers said that they never considered if there was a mistake in the duty they paid.
Cornerstone Tax estimates that £2bn is overpaid to HMRC due to the complicated and often confusing nature of the tax. In the last year, the firm has reclaimed £15m on behalf of clients, most of whom are individuals.
“There are now 49 different stamp duty reliefs, many of which are not well known, making it difficult to calculate the correct rate of stamp duty for each transaction,” said Cornerstone Tax group chairman David Hannah.
The UK property market has been buoyant since last year – with 11.8 per cent house price growth in 2021. This rise has been largely attributed to the stamp duty holiday introduced during the peak of the coronavirus pandemic in July 2020, which scrapped the tax on the first £500,000 of a home sale.
Normal stamp duty was reintroduced last September. However, demand for property has not faltered since then, with house prices rising every month and the average price hitting a high of £294,845.