7. Stamp Duty Land Tax Flashcards
What is the amount of SDLT due based on?
The consideration exchanged for the property
When must a SDLT return be sent to HMRC even if there is no tax to be paid?
Within 14 days of completion
What is the value of the transaction where land/buildings are given to a company in exchange for shares?
The market value of the land/buildings
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
What are the penalties imposed if SDLT return is filed (1) up to three months late, (2) over three months late, and (3) over one year late, regardless of whether SDLT is actually owed?
Up to three months: £100
Over three months: £200
Over one year: Up to 100% of the SDLT due
What do the SDLT thresholds and rates depend on?
Whether the property is residential, non-residential, or mixed
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
By what percentage is each rate increased if a person already owns a residential property, and buys another one, and what is the lower limit for application of this rule?
3%, e.g. the 0% rate becomes 3%; the 2% rate becomes 5%, etc.
£40,000 lower limit.
In what situations are the increased rates either not charged, or charged but refunded?
Where the new property replaces the purchaser’s only or main residence
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)
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?
£500,000
What are the reduced rates when the relief for purchase of first residence applies?
0% on the first £300,000; 5% on remainder up to £500,000
What does it mean that the purchase of first residence is an all or nothing relief?
If the property is worth more than £500,000, there is no relief at all
Where there are multiple linked transactions, what is the relevant consideration, and what is the downside of this?
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.
What relief is available where due to totaling the considerations, the SDLT payable is more than it would be individually?
SDLT is calculated based on the average consideration, i.e. total considerations divided by the number of properties
