14. TC - Stamp taxes Flashcards
What is stamp duty charged on?
Charged on the transfer of existing shares or securities using a stock transfer form
Stamp duty reserve tax applies to paperless transactions
When does stamp duty reserve tax apply?
Applies to paperless transactions
What is the amount of stamp duty payable? and who is it payable by?
Stamp duty is payable by purchaser at 0.5% x consideration rounded up to nearest £5
Is stamp duty always charged, regardless of the price
No, there is no charge to stamp duty if the consideration is less than £1,000
What is the deadline for stock transfer forms? and what must be done at the same time
Must be presented to HMRC within 30 days of execution and the duty must be paid at the same time
When do penalties apply for presenting a transfer form late?
When the delay is not deliberate, mitigated penaltys usually apply
In the exam, assume that the delay is not deliberate unless told otherwise
What do mitigated penalties for late transfer forms depend on
Depends on the number of months of the delay
Summarise the penalties for late transfer forms
Up to 12 months = 10% of duty, capped at £300
12-14months = 20% of the duty
24+ months = 30% of the duty
Rounded down to nearest £5
How are penalties for late transfer forms rounded?
Rounded down to nearest £5
When is a penalty for late transfer forms not charged?
When the penalty comes to less than £20
What does the penalty depend on for late transfer forms when the delay is over 12 months and deliberate
Depends on the type of failure (deliberate or deliberate and concealed)
the nature of the disclosure (prompted or unprompted)
and the timing of the disclosure
What can also be charged alongside a penalty for late transfer forms?
Interest can be charged if the amount is paid late
It runs from end of 30 day period to the day before the duty is paid
a rate of 3.25% applies but the interest is rounded down to nearest £5 and isn’t charged if the amount is less than £25
What is the rate of interest on late paid transfer fees?
3.25%
But rounded down to nearest £5 and isn’t charged if the amount is less than £25
TYU1: Millie sells her shares in Rory Ltd to Ben for £74,830 on 11 August 2019
State the amount of stamp duty, the person liable to pay it and the due date for both paying the tax and presenting the stock transfer form to HMRC
Ben must pay stamp duty of £74,830 x 0.5% =£374.15 rounded up to £375
The duty must be paid and stock transfer form presented to HMRC by 10 September 2019
Give some examples of items that are exempt from stamp duty
- Gifts (in lifetime or in death)
- Divorce arrangements
- Variations of wills
- Securities dealt on a RECOGNISED GROWTH MARKET (e.g. aim)
What does SDRT stand for?
Stamp duty reserve tax
What does SDRT apply to?
Applies to paperless transfer of shares or securities (usually via a CREST system)
What is the % of SDRT payable?
Payable at 0.5% x consideration with NO rounding
How is SDRT collected?
Collected automatically by stock brokers
When must SDRT be paid?
Must be paid to HMRC 14 days after the trade date if via CREST, otherwise by the 7th day of the month following the month the agreement was made
What penalties are charged for late filing or payment for SDRT?
Those falling under the common penalty regime
What % of interest is paid on late SDRT?
3.25%
When does interest run from and to on late payments of SDRT?
Runs from the due date to the actual date of payment
When is there no SDRT payable?
When there is no consideration i.e. it is agift
Group transfers qualifying for stamp duty relief are also exempt from SDRT
Securities dealt on recognised growth markets e.g. AIM
When is there no SDRT payable?
When there is no consideration i.e. it is agift
Group transfers qualifying for stamp duty relief are also exempt from SDRT
Securities dealt on recognised growth markets e.g. AIM
Who pays SDLT?
The purchaser in a land transaction
Give some examples of when SDLT is payable?
When purchasing land
When assignment/ grant of a lease
When must a land transaction form be submitted by?
On/after 1 March 2019 a land transaction form must be submitted within 14 days
And SDLT paid by the same date
For transactions before 1 march 2019 the time limit was 30 days
What is SDLT charged on?
Charged on the VAT inclusive price at the relevant rate for each slice of consideration
What does SDLT stand for?
Stamp Duty Land Tax
What are the bands and rates for residential SDLT?
0% up to £125k 2% £125,001 - £250,000 5% £250,001 - £925,000 10% £925,000 - £1.5m 12% £1.5m +
What are the bands and rates for non-residential SDLT?
0% up to £150k
2% £150k-£250k
5% £250k +
How are residential rates sometimes increased?
Each residential rate is increased 3% for the purchase of additional residential properties (e.g. where they already own a residential home and are buying a property to let)
But higher rates are not charged for transactions under £40k
Can be refunded if the new property replaces the purchasers only home/main residence
When is the additional rate for buying an additional residential property refunded?
Can be refunded if the new property replaces the purchasers only home/main residence
When is the additional rate for buying an additional residential property not charged?
Higher rates are not charged for transactions under £40k
What are the rates for individuals buying their first property as their first and only home ?
0% on consideration up to £300k
5% on £300k-£500k
Then back to usual
5% £500,000 - £925,000
10% £925,000 - £1.5m
12% £1.5m +
TYU2: Peter purchased a house costing £275k on 9 Oct 2019
Calc the amount of stamp duty land tax payable and state the due date for payment assuming that:
a) Peter owns no other residential property
a. £125,000 x 0% 0 £250k - £125k x 2% = £2,500 £275k - £250k x 5% = £1,250 SDLT payable by 23 Oct 19 £3,750
TYU2: Peter purchased a house costing £275k on 9 Oct 2019
Calc the amount of stamp duty land tax payable and state the due date for payment assuming that:
b) Peter already owns another house and intends to let this one out
b.
£125k x 3% £3,750
£250k - £125k x 5% £6,250
£275k - £250k x 8% £2,000
SDLT payable by 23 Oct 19 £12k
TYU2: Peter purchased a house costing £275k on 9 Oct 2019
Calc the amount of stamp duty land tax payable and state the due date for payment assuming that:
c)Peter is a first time buyer
No SDLT as the consideration is below £300k
TYU3: Rob purchased the following assets in Nov 19
Retail shop £220k from George
Office building £145k from Patrick
a. Calculate the stamp duty land tax payable on each transaction and state who pays the duty
b. State the due date for both paying the tax and presenting the land transaction form to HMRC assuming the actual date of the transaction was 15 November
Retail shop £150k x 0% 0 70k x 2% £1,400 £220k SDLT = £1,400 Rob
Office building
£145,000 x 0% = 0 Phil
A land transaction form must be submitted by Rob by 29 November 2019 and the SDLT paid by the same date
What are the % rates for SDLT on total rents non-(residential)
0% up to £150k
1% £150k-£5m
2% £5m +
TYU4: Kevin is granted a 24 year lease of a factory on 16 Nov 19 for a premium of £155k
Kevin will pay an annual rent of £10k per year for the term of the lease
Calc the amount of SDLT payable and state the due date
Premium
£150k x 0%
£155k - £150k x 2% £100
SDLT payable by 30 Nov 2019 £100
Total rent
The total rent over the life of the lease = 24 x £10k = £240k
£150k x 0% = 0
£240 - £150 x 1% £900
SDLT payable by 30 Nov 2019 = £900
What are the penalties if land transaction forms are submitted late?
Up to 3 months late: £100
Over 3 months late: £200
Over a year late: tax geared penalty (capped at amount of SDLT due)
What are penalties for errors of land transaction form?
Fall in with common penalty regime
What is the interest rate charge on late SDLT paid and when does it run from/to?
3.25%
Interest runs from day after the due date to the day before the duty is paid
What are exempt from SDLT?
- Gifts
- Transfers on divorce
- Variation of a will
- Intragrop transactions are exempt unless
at the time fo transfer arrangements exist for the transferor and transferee companies to cease to be members of the same group
no transfer is not for bonafide commercial reasons
When are intragroup transfers exempt for SDLT?
- Intragrop transactions are exempt unless
at the time fo transfer arrangements exist for the transferor and transferee companies to cease to be members of the same group
no transfer is not for bonafide commercial reasons
