14. TC - Stamp taxes

Question 1

What is stamp duty charged on?

Answer 1

Charged on the transfer of existing shares or securities using a stock transfer form
Stamp duty reserve tax applies to paperless transactions

Question 2

When does stamp duty reserve tax apply?

Answer 2

Applies to paperless transactions

Question 3

What is the amount of stamp duty payable? and who is it payable by?

Answer 3

Stamp duty is payable by purchaser at 0.5% x consideration rounded up to nearest £5

Question 4

Is stamp duty always charged, regardless of the price

Answer 4

No, there is no charge to stamp duty if the consideration is less than £1,000

Question 5

What is the deadline for stock transfer forms? and what must be done at the same time

Answer 5

Must be presented to HMRC within 30 days of execution and the duty must be paid at the same time

Question 6

When do penalties apply for presenting a transfer form late?

Answer 6

When the delay is not deliberate, mitigated penaltys usually apply
In the exam, assume that the delay is not deliberate unless told otherwise

Question 7

What do mitigated penalties for late transfer forms depend on

Answer 7

Depends on the number of months of the delay

Question 8

Summarise the penalties for late transfer forms

Answer 8

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

Question 9

How are penalties for late transfer forms rounded?

Answer 9

Rounded down to nearest £5

Question 10

When is a penalty for late transfer forms not charged?

Answer 10

When the penalty comes to less than £20

Question 11

What does the penalty depend on for late transfer forms when the delay is over 12 months and deliberate

Answer 11

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

Question 12

What can also be charged alongside a penalty for late transfer forms?

Answer 12

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

Question 13

What is the rate of interest on late paid transfer fees?

Answer 13

3.25%

But rounded down to nearest £5 and isn’t charged if the amount is less than £25

Question 14

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

Answer 14

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

Question 15

Give some examples of items that are exempt from stamp duty

Answer 15

• Gifts (in lifetime or in death)
• Divorce arrangements
• Variations of wills
• Securities dealt on a RECOGNISED GROWTH MARKET (e.g. aim)

Question 16

What does SDRT stand for?

Answer 16

Stamp duty reserve tax

Question 17

What does SDRT apply to?

Answer 17

Applies to paperless transfer of shares or securities (usually via a CREST system)

Question 18

What is the % of SDRT payable?

Answer 18

Payable at 0.5% x consideration with NO rounding

Question 19

How is SDRT collected?

Answer 19

Collected automatically by stock brokers

Question 20

When must SDRT be paid?

Answer 20

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

Question 21

What penalties are charged for late filing or payment for SDRT?

Answer 21

Those falling under the common penalty regime

Question 22

What % of interest is paid on late SDRT?

Answer 22

3.25%

Question 23

When does interest run from and to on late payments of SDRT?

Answer 23

Runs from the due date to the actual date of payment

Question 24

When is there no SDRT payable?

Answer 24

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

Question 25

When is there no SDRT payable?

Answer 25

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

Question 26

Who pays SDLT?

Answer 26

The purchaser in a land transaction

Question 27

Give some examples of when SDLT is payable?

Answer 27

When purchasing land | When assignment/ grant of a lease

Question 28

When must a land transaction form be submitted by?

Answer 28

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

Question 29

What is SDLT charged on?

Answer 29

Charged on the VAT inclusive price at the relevant rate for each slice of consideration

Question 30

What does SDLT stand for?

Answer 30

Stamp Duty Land Tax

Question 31

What are the bands and rates for residential SDLT?

Answer 31

``` 0% up to £125k 2% £125,001 - £250,000 5% £250,001 - £925,000 10% £925,000 - £1.5m 12% £1.5m + ```

Question 32

What are the bands and rates for non-residential SDLT?

Answer 32

0% up to £150k 2% £150k-£250k 5% £250k +

Question 33

How are residential rates sometimes increased?

Answer 33

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

Question 34

When is the additional rate for buying an additional residential property refunded?

Answer 34

Can be refunded if the new property replaces the purchasers only home/main residence

Question 35

When is the additional rate for buying an additional residential property not charged?

Answer 35

Higher rates are not charged for transactions under £40k

Question 36

What are the rates for individuals buying their first property as their first and only home ?

Answer 36

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 +

Question 37

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

Answer 37

``` 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 ```

Question 38

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

Answer 38

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

Question 39

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

Answer 39

No SDLT as the consideration is below £300k

Question 40

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

Answer 40

``` 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

Question 41

What are the % rates for SDLT on total rents non-(residential)

Answer 41

0% up to £150k 1% £150k-£5m 2% £5m +

Question 42

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

Answer 42

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

Question 43

What are the penalties if land transaction forms are submitted late?

Answer 43

Up to 3 months late: £100 Over 3 months late: £200 Over a year late: tax geared penalty (capped at amount of SDLT due)

Question 44

What are penalties for errors of land transaction form?

Answer 44

Fall in with common penalty regime

Question 45

What is the interest rate charge on late SDLT paid and when does it run from/to?

Answer 45

3.25% | Interest runs from day after the due date to the day before the duty is paid

Question 46

What are exempt from SDLT?

Answer 46

- 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

Question 47

When are intragroup transfers exempt for SDLT?

Answer 47

- 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