Tax expert claims buyers of homes-with-annexes may pay excess SDLT

A tax expert says his research suggests some buyers of homes with annexes may have paid too much stamp duty on their purchases.

The Cornerstone Tax consultancy says there are now nearly 39,000 so-called granny annexes in England and Wales alone – an increase of 16 per cent in recent years.

The consultancy says a lesser known benefit of purchasing a property with a self-contained annex is that a buyer could be eligible for Multiple Dwellings Relief, leading to a reduced stamp duty fee.

Cornerstone’s principal consultant David Hannah claims his research has found that 25 per cent of existing owners of properties with annexes were not advised at the time of their purchase that a reduced rate of stamp duty may have been possible - although not guaranteed. 

“This often results in homeowners being owed tens of thousands of pounds in stamp duty refunds” according to the consultancy.

Hannah himself says: “This demonstrates a lack of clarity in and around stamp duty land tax, both by the public and the legal sector. Millions of properties across the UK could qualify for reduced stamp duty rates if, for example, they have a self contained side annex as part of the property. In these cases, solicitors have a duty of care to inform their customers of all potential stamp duty reductions, including where Multiple Dwellings Relief is available.”

He says that in almost all cases the errors are totally unintentional and made “in fear of underpaying” but he adds that “most legal professionals are ill-equipped to navigate the complex rules around it and need help.”

Hannah claims some legal advisers “simply aren’t familiar with the intricacies of the law’s evaluation criteria, which has led to many being mis-advised unintentionally. There are a number of other reasons why people have overpaid; it’s not always a misinterpretation of the three per cent surcharge."

Earlier this month Cornerstone claimed some 120,000 buyers in the UK - not necessarily restricted to those purchasing properties with annexes - may be owed SDLT refunds. Again the consultancy suggested this may be because of misinterpretations of how the tax is levied.