Taxman to pay for stamp duty bungle
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Your support makes all the difference.THE Inland Revenue has been overcharging stamp duty on house purchases and, in an embarrassing U-turn this week, is to refund the excess to affected homebuyers at a potential cost of thousands.
Homebuyers who have part- exchanged their home for another since 8 December 1993 may apply for repayment.
Stamp duty of 1 per cent of the purchase price is paid if you buy a house costing more than pounds 60,000. About a quarter of new house sales are part-exchanges, which are also common among families.
Before the November Budget, when buyers exchanged one freehold property for another they paid stamp duty only on the cash difference between the two properties - which often meant no stamp duty at all.
That changed in the last Budget when it was announced that exchanges would be treated as sales, with duty payable on both transfers.
It was automatically assumed that buyers exchanging a pounds 50,000 house for one worth pounds 100,000, would pay stamp duty of pounds 1,000, and the other party would pay nothing.
The Inland Revenue had a completely different interpretation - the duty payable was to be calculated on the value of the more expensive property. In our example, each leg of the transaction attracts duty on pounds 100,000, so both parties would pay pounds 1,000.
The Stamp Duty Office, part of the Inland Revenue, has been unofficially confirming that there are ways around the changes.
The Inland Revenue now accepts that if there is a straightforward exchange, each party pays stamp duty on the purchase.
Liz Bridges, director of taxation services at the Building Employers Confederation, says: 'The Inland Revenue really has got no alternative but to offer refunds.'
In our example, the buyer of the pounds 50,000 house would pay no stamp duty, and the buyer of the pounds 100,000 house would pay pounds 1,000.
Don Draper, director of stamp duty services at the accountants Price Waterhouse, says: 'If you part-exchanged your home and the house you bought was pounds 60,000 or less, contact your solicitor to apply for a refund if you paid any stamp duty. Similarly, if you bought the cheaper property in a part-exchange, whatever the price of it, check you paid the correct stamp duty.'
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