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Stamp duty reform needed to stop £160m refunds: Royal London

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Higher stamp duty charges aimed at curbing buy-to-let landed ordinary homebuyers with an £160m tax bill last year, according to Royal London.
The mutual insurer says the figure then needed to be refunded, and is calling for a more logical system.
Higher rates of stamp duty land tax were introduced in April 2016 for those purchasing second properties.
The higher rates are three percentage points above current SDLT rates.
The scheme was designed to slow down buy-to-let transactions but has a flaw for residential homeowners.
If someone buying a new property and selling their old one finds the sale has fallen through, then they have to pay the higher tax as they inadvertently own two properties.
The size of the bills in these cases can be considerable.
Someone buying an averagely-priced South East property of £320,168 would have to pay an extra £15,613 as opposed to £6,008.
Someone buying an average property in North East England of £130,000 could find themselves facing a bill of around £4,000 when they were only expecting to pay £100.
Royal London says the extra SDLT should only be payable by genuine owners of multiple properties.
One way of doing this would be to only charge the extra SDLT a year after completing a purchase of a second home, the insurer says.
Royal London personal finance specialist Helen Morrissey says: “HMRC’s approach to higher rate second home stamp duty risks causing severe financial hardship for home buyers.
‘House sales can fall through for all kinds of reasons and the last thing families need is to receive a bill totalling thousands of pounds because they have inadvertently found themselves owning two properties for a short space of time.
“The fact you can get a refund at some point in the future is cold comfort to having to find the money to pay the bill – how many people have ready access to such sums?”

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