SDLT Review in 2026: What You Need To Know
Stamp Duty Land Tax (SDLT) can be a minefield; getting the calculations wrong often leads to costly overpayments. Did you know that if you are about to complete a UK property purchase, the SDLT may be less than you have been told, and that if you have completed a transaction within the last 4 years, you might be eligible for a refund?
Recent legal cases and better insights into SDLT rules have created opportunities for property owners to either pay less SDLT at completion (because of inaccurate information and calculations they are given by their legal representatives) or for those who completed up to 4 years ago, based on what they were told at the time, could be in line for a refund of overpaid tax. Many are unaware they’ve paid more than they should—are you one of them?
SDLT Review: Pre-Completion and Post-Completion
An SDLT review is the process of appointing an SDLT specialist to take another look and recalculate the SDLT due or the amount already paid. This can happen before you purchase the property, allowing you to pay the correct, lower amount in the first place, or you can review the SDLT payment you made up to 4 years after you purchased the property.
Overpayments on already completed transactions often happen when a property’s use is misclassified or when specific reliefs are overlooked. For high-net-worth individuals and property investors, these errors and omissions can cost tens or even hundreds of thousands of pounds. Identifying these mistakes is the first step toward either reclaiming the overpaid tax, or for those who will soon complete a new purchase, it’s a case of making sure that the correct and lower amount is paid at the outset
The Foundation of Many Overpayments: Mixed-Use Property
Misclassifying a property is one of the most frequent—and costly—reasons for an SDLT overpayment.
The distinction between ‘residential’ and ‘mixed-use’ is critical. Residential rates are tiered and can climb to 17% with surcharges. However, mixed-use properties—those combining residential and non-residential elements—are taxed at significantly lower non-residential rates.
The challenge is correctly identifying these elements. It isn’t just about shops or offices; the legal definition of non-residential use is much broader than most investors realise. Understanding this nuance is the key to protecting your capital.
Parking and Storage on Separate Leases
A prime example of a mixed-use property? Think flats with separate parking or storage units under different leases. While it may feel like a single residential purchase, the law often treats it differently.
The game-changer? Sehgal v HMRC. The tribunal ruled that parking spaces on separate leases counted as mixed-use, unlocking lower non-residential SDLT rates. This precedent has paved the way for property owners to reclaim overpaid tax, sometimes saving up to 75% of the original SDLT. A win worth knowing about!
The Share of Freehold Connection
What if your flat purchase included more than just your living space? Owning a share of the freehold in a building with commercial units or communal land could reclassify your purchase as mixed-use. This isn’t just about owning your home; it’s about owning a piece of a larger, non-residential entity. Successfully arguing this point can slash your SDLT bill by applying the lower non-residential rates to the entire transaction. It’s a complex but potentially powerful strategy for significant tax savings.
Redefining “Uninhabitable” and Non-Residential Use
The condition of a property at the time of purchase is another critical factor in determining the correct SDLT liability. Historically, buyers of derelict or “uninhabitable” properties could argue for non-residential rates. While the rules around this have become stricter, opportunities still exist, particularly in unconventional property types.
The Hotel Residence Precedent
A fascinating 2023 case involved a buyer who purchased a property that had been a former hotel. She successfully argued that the property should be taxed at non-residential rates, and the court agreed. This judgment is significant because it broadens the scope of non-residential claims beyond derelict buildings.
The ruling suggests that high-end properties located within premium blocks that are part of a hotel, or that offer hotel-level facilities and services, could also qualify for non-residential SDLT treatment. For those who have purchased apartments in serviced buildings with amenities like a concierge, room service, or extensive managed facilities, this precedent could provide a strong basis for a reclaim. The financial implications are substantial, mirroring the savings seen in mixed-use cases.
Specialised Scenarios: Assisted Living and Leases
The reclaim opportunities are not limited to mixed-use or uninhabitable properties. Specific investment structures also offer significant SDLT savings, particularly regarding the 3% surcharge on additional dwellings.
Investments in Assisted Living Units
Many investors purchase units in assisted living or retirement complexes. A common model involves the investor buying the property and immediately leasing it back to an operating company for a long term, often 25 years. This lease is a commercial arrangement.
In these circumstances, the 3% SDLT surcharge on additional residential properties should not apply. The legislation provides relief from the surcharge for properties subject to a lease of 21 years or more. This is a straightforward interpretation of the law, yet it is frequently overlooked by conveyancers. For an investor purchasing multiple units, the savings can be considerable. On a property worth £250,000, avoiding the surcharge saves £7,500 per unit.
If you’re interested in Assisted Living Buy-To-Let investments, our sister company, Lifestyle Property, may have projects available.
How to Review Your SDLT?
Think you’ve overpaid on Stamp Duty? You might be right. Reclaiming your money involves a detailed application to HMRC, backed by a solid understanding of tax legislation. This can be complex, but getting it right could lead to a significant refund.
If you’re still pre‑completion, an SDLT assessment can save you money before you even finalise the transaction. By reviewing the property details and contract in advance, you can ensure the correct tax treatment from the outset and avoid unnecessary costs.
Don’t leave your money on the table. Whether you’ve already completed your purchase or you’re still in the process of buying, a free, no‑obligation SDLT review can protect you from paying more tax than you should. It costs you nothing to find out, and you could end up with an unexpected windfall.