6b. Tax - Property Flashcards
Stamp duty land tax
What is the amount of SDLT due based on?
The consideration exchanged for the property
If land/buildings are given to a company in exchange for shares, SDLT is based on the market value of the land/buildings
Stamp duty land tax
When must a SDLT return be sent to HMRC even if there is no tax to be paid?
Within 14 days of completion
Stamp duty land tax
What four types of property transfer are exempt from SDLT?
Property transferred:
- As a gift
- To a spouse
- To a former spouse upon divorce
- Under a variation of a will changing the beneficiary within two years of the decedent’s death
Stamp duty land tax
What do the SDLT thresholds and rates depend on?
Whether the property is residential, non-residential, or mixed
Stamp duty land tax
What is the nil-rate band for SDLT for (1) residential and (2) non-residential properties?
- £250,000
- £150,000
Stamp duty land tax
How is SDLT considered a tiered tax?
Because the applicable rate applies to the amount of consideration within the threshold, before applying higher rates to excess amounts
Similar to how income tax operates
Stamp duty land tax
By what percentage is each rate increased if a person already owns a residential property, and buys another one?
What is the lower limit for application of this rule? In what situations are the increased rates either not charged, or charged but refunded?
3%, e.g. the 0% rate becomes 3%; the 2% rate becomes 5%, etc.
£40,000 lower limit. Not charged where the new property replaces the purchaser’s only or main residence
Stamp duty land tax
How is SDLT payable on the grant of a new lease calculated?
Based on either or both of:
- Lease premium paid up front (usual rate), or
- Net present value of the rent payable (lower rate)
Stamp duty land tax
What is the upper limit of the property value for which SDLT relief is available to buyers of their first property to be used as their main residence?
What are the reduced rates when the relief for purchase of first residence applies?
£625,000
0% on the first £425,000; 5% on remainder up to £625,000
Stamp duty land tax
Where there are multiple linked transactions, what is the relevant consideration, and what is the downside of this?
What relief is available where due to totaling the considerations, the SDLT payable is more than it would be individually?
The total of the chargeable considerations for each transaction.
This may result in more SDLT being payable than if it was charged against each individually.
SDLT is calculated based on the average consideration, i.e. total considerations divided by the number of properties
Stamp duty land tax
What further relief is available when six or more residential properties are purchased in a single transactions?
Purchaser can choose to apply non-residential rates
Stamp duty land tax
What are the SDLT rates for residential property?
- Up to £250k: 0% (£425k if first time buyer)
- The next £625k: 5%
- The next £575k: 10%
- Remaining: 12%
Stamp duty land tax
What are the SDLT rates for non-residential property?
- Up to £150k: 0%
- The next £100k: 2%
- Remaining: 5%
Capital gains tax
Under Private Residence Relief, what is the equation to calculate how much of the gain is exempt from CGT?
Gain x (period of occupation / period of ownership)
Capital gains tax
For Private Residence Relief, the last how many months of ownership will be treated as deemed occupation, and what is the one condition for this to apply?
Nine months, regardless of how long the taxpayer lived there, as long as they occupied the property as their home for some time
