Recent figures show a sharp rise in the number of homebuyers being investigated for underpaying stamp duty, as HM Revenue & Customs intensifies its scrutiny of refund claims it believes may be speculative or incorrect.

During the 2024–25 tax year, more than 3,000 property buyers were investigated for stamp duty underpayments, roughly double the number recorded the previous year. As a result of these investigations, HMRC recovered over £200 million in additional tax, with the average case resulting in around £66,000 being repaid. This compares with approximately £85 million recovered the year before, highlighting a significant escalation in enforcement activity.

Stamp duty land tax applies to residential property purchases above £125,000, or £300,000 for first-time buyers, with rates ranging from 2% to 12%. Buyers of second homes are also required to pay an additional surcharge of 5%. The tax is typically settled on completion of a property transaction.

In certain circumstances, buyers may be entitled to a refund. This can arise where an error was made in the original calculation, where too much tax was paid, or where eligibility for a relief or exemption was later established. For example, refunds may apply if a buyer pays the higher rates on a second property but sells their previous main residence within three years, or if a non-UK resident subsequently becomes UK resident.

HMRC’s process generally involves paying refunds promptly before carrying out detailed checks. However, where it later determines that a claim was not valid, the taxpayer can be required to repay the amount received, potentially alongside interest and penalties. This approach has placed greater emphasis on ensuring claims are accurate at the outset.

The tax authority has recently warned buyers to be cautious when approached by so-called repayment agents, particularly those promoting stamp duty refunds on a no-win-no-fee basis via social media. Some of these agents have encouraged claims based on the argument that properties requiring renovation should not be treated as residential for stamp duty purposes. HMRC has stated that such claims are often incorrect.

Case law has reinforced this position. A Court of Appeal ruling in 2024 confirmed that a property will generally still be considered residential even if it requires significant work, such as a new kitchen or major rewiring, provided it is structurally sound. As a result, reduced stamp duty rates are only available in limited circumstances and should not be assumed to apply simply because a property is in poor condition.

Public attention has also been drawn to stamp duty compliance following a high-profile case involving the underpayment of tax on a second property. Tax advisers have suggested that this may encourage HMRC to further tighten its focus on second-home purchases and refund claims.

For buyers, the message is clear. Stamp duty rules are complex, and while legitimate refunds do exist, claims should be approached with care. Taking advice from reputable professionals and avoiding aggressive or speculative strategies is essential. Incorrect claims can ultimately result in higher costs than the tax originally paid, particularly once penalties and interest are taken into account.

Stamp Duty Refund Claims Under Scrutiny as HMRC Steps Up Enforcement

Paul Morgan

Financial Adviser

26th January 2026