7 - Stamp Duty Flashcards
SDLT
What transactions is stamp duty land tax (SDLT) payable on?
Which party pays (buyer/seller)?
Who takes care of it usually, and on what basis is it calculated?
SDLT is payable by the purchaser of land (including properties).
It’s calculated on a self assessment basis (not part of your self assessment tax return, just means it’s your responsibility to calculate, HMRC don’t do it for you).
The solicitor of the transaction usually takes care of it.
How is SDLT calculated?
See tax tables for the rates.
The amount within each band is chargeable at that rate (eg first £125k is free, next £125k at 2% etc.).
Non-residential land/property has a separate schedule of charges.
Note that you don’t pay SDLT on furniture, carpets (etc.) but if you pretend a big chunk of the price is for that purpose HMRC will challenge.
If you don’t pay with cash then market value is used for SDLT calc.
SDLT
What are the new first time buyer rules?
New rules announced in 2017 mean that a first time buyer buying residential property after 22/11/17 gets lower rates.
Between 0 and £350k they pay at 0%.
Between £350k and £500k they pay 5% (so £7,500 maximum bill).
If the property is worth more than £500k they pay the same as anybody else would, on the whole price!
SDLT
Two special cases
- Companies buying residential properties over £500k are charged a flat 15% rate on the whole price.
- From 1/4/16 second homes are charged an additional 3% if they’re worth more than £40k. To calculate this just do the normal SDLT calculation first, then add another 3% on the whole price.
What is the land and buildings transaction tax?
Scottish version of SDLT.
Administered by revenue Scotland, works in the same way as SDLT (different rates though) and they also have a 3% surcharge for second homes.
What is stamp duty/SDRT?
Key exemption
Who pays it?
CGT implication.
This is a tax you have to pay on a transaction involving the transfer of shares, stocks and unit trusts.
Don’t pay any on AIM shares.
Payable by the purchaser.
This is a deductible cost for CGT calculations.
Details of Stamp Duty
0.5% charge rounded up to the nearest £5.
Don’t pay on transactions below £1k.
Details of SDRT
Also 0.5% but rounded to the nearest penny.
No exemption for trades below £1k.
