Claiming back stamp duty because of an in house annexe

Kernowshep

Has anyone tried claiming back some stamp duty because they have an area in their house that would constitute an annexe? 

We've be contacted by a company who thinks we can, but I presume they take a cut and don't give it back if HMRC contest and win further down the line.

It's something to do with the annexe being up to a 1/3 rd of the overall price and averaging the stamp duty across the two parts of the property.
The area has access to the garden is one room plus a shower room and has a door separating it to the rest of the house. The house particulars floor plan shows it as annexe / office.

Any info/experience greatly received.

princeofpounds

You won't need to use an external company. Most of what you need will be somewhere deep in the SDLT Manual, and you can talk to HMRC and/or your conveyancing solicitor (who will presumably have filled in your original SDLT form and applied some thought to it at the time) to confirm.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00210

You'll see there are several sections relating to what is a dwelling for SDLT purposes. Some of it is concerned with what is commercial vs. residential, some of it is concerned with how many dwellings there are.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm00410

I suspect you are thinking of multiple dwellings relief.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm29905

This is where I run out of time to research for you for this evening, but I suspect this option won't be much good to you. You may be eligible for lower rates of basic stamp duty if you divide the property into two dwellings, but you will probably then be hit by the additional stamp duty rate for owning more than one dwelling. 

oldbikebloke

what you are asking about is MDR - multiple dwellings relief where SDLT is charged on the average of the "value" of two separate properties, not the whole price paid for a consolidated "single" total value (ie purchase price)

2 overriding issues:
a) is the "annex" genuinely a self contained separate dwelling? One room plus shower and door is not in itself enough. You would not be able to live a self contained life without a toilet and cooking facilities. Does the property have 2 kitchens so that neither you nor the "annex" dweller would ever need to share facilities? What is its council tax status (Separate band for separate dwellings? What, if any, planning restrictions are in place? Both are rough indicators of existing "official" acceptance of an annex).  If not, an MDR claim fails. 

b) if genuinely self contained, would the value of the annex considered on its own be less then 1/3rd of the total value of the "whole" property. If not, an MDR claim fails. 

if yes to both you have the basis for an MDR claim, which may result in a refund of the difference between what you actually paid and the MDR averaged value. Obviously that assumes you paid "full" SDLT in the first place, so go back to your conveyancer and get them to explain to you on what basis they prepared the SDLT return you have already submitted and paid... only then can you even begin to think about whether you have the basis of a claim.

SDLT_Geek

Does the annexe have a kitchen area?  If not, it is most unlikely to be suitable for use as a separate dwelling so as to qualify for multiple dwellings relief.

Has it been let out in the past on a short hold tenancy?  Does it have its own council tax band?  Both of those would be supportive.

FreeBear

princeofpounds said: You may be eligible for lower rates of basic stamp duty if you divide the property into two dwellings, but you will probably then be hit by the additional stamp duty rate for owning more than one dwelling. 

And will be required to pay council tax on the second dwelling - If it isn't occupied, there may well be a 100% surcharge as a second home.

SDLT_Geek

There is a blog about letters from claims companies suggesting a refund of stamp duty land tax might be due.  It is on the website of the Chartered Institute of Taxation here: https://www.tax.org.uk/stamp-duty-refunds-too-good-to-be-true