UK pensioners potentially due £6bn in HMRC Stamp Duty refunds, findings reveal

New findings Cornerstone Tax have revealed that British pension holders could be entitled to nearly £6 billion in stamp duty refunds from HMRC due to being misadvised in relation to the tax.

The revelation comes as owners of commercial property often transfer these into their pensions, and some solicitors and advisors may have advised their clients that stamp duty needed to be paid when it was not due. As a result, Cornerstone Tax has already successfully assisted 180 affected clients in this area, boasting a 100% success rate, resulting in savings totalling an impressive £5,895,557.00, with an average of £32,753.09 per client.

Pension-related transactions have emerged as a prominent source of stamp duty errors, as businesses frequently sell their properties to their pension funds as part of retirement planning. However, amidst a cost of living crisis when financial security for retirement is vital, Cornerstone has revealed that the error could mean that not only did clients lose capital from their pensions in the initial SDLT payment but also the potential to invest that capital, thereby losing any potential growth in the ensuing years. For the average error, the value of the claim is therefore calculated at 150% of the tax paid incorrectly (assuming a 7% ROI).

Cornerstone first identified the problem in early 2019 and approached several members of the pensions industry with their concerns. Advance clearance was also sought from HMRC and obtained – confirming that pensions that acquired trade properties from joint owners or owner-managed companies since 2007 and have paid SDLT on these contributions in specie or sales to pension schemes should not have paid SDLT.

It is estimated that this has affected between 3,000-5,000 cases a year, meaning 45,000-75,000 cases since 2007. Those affected could be owed up to £80,000 each, and it has taken over two years and the intervention of former Pensions Minister, Baroness Ros Altmann – who has highlighted the need to look into this matter seriously – for some members of the association to concede that a serious issue exists. Cornerstone Tax commented:

“By conducting a thorough analysis, seeking professional advice, and understanding the applicable regulations, you can minimize the risk of overpaying SDLT. However, if an overpayment does occur, initiating a review promptly allows you to rectify the situation, gather evidence, and pursue appropriate actions to claim a refund or make adjustments as required.”

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