Chapter 12: Stamp Duty Land Tax Flashcards
When must SDLT return be submitted?
When a person buys or leases land or buildings in the UK, they must send HMRC a Stamp Duty Land Tax (SDLT) return within 14 calendar days of completion, irrespective of whether any SDLT is actually due.
When must a buyer pay SDLT?
If the consideration given for the property exceeds the applicable SDLT threshold, the buyer must pay the SDLT due to HMRC within 14 calendar days of completion
What is the amount of tax due based on?
The amount of the tax due is based on the consideration exchanged for the property.
Typically, this will be money, but it could also be based on the value of work performed in exchange for the property, the value of other property exchanged for the property, the amount left owing on a mortgage taken over by a transferee, etc.
What happens if the land and/or buildings are transferred to a company connected with the transferor in exchange for shares? When does this often occur?
The transaction is deemed to be made for the market value of the land.
This situation will often occur when a sole trader incorporates their business.
The company will have to send an SDLT return on completion + pay SDLT if the fair market value of the land exceeds the applicable threshold.
What transactions are exempt from SDLT?
A number of transactions are exempt, including:
1. Property transferred as a gift,
2. Property transferred to a spouse,
3. Property transferred to a former spouse upon divorce, and
4. Property transferred under a variation of a will changing the beneficiary entitled to the property within 2 years of the decedent’s death
When may interest be charged on SDLT?
If it is paid late.
When may a penalty be imposed on SDLT?
If the land transaction form is submitted late.
What penalties will be imposed if the land transaction form is submitted late?
If the form is filed up to 3 months late, a fixed penalty of £100 is automatically imposed
If the form is submitted over 3 months late, a fixed penalty of £200 if automatically imposed.
This penalty is imposed regardless of whether SDLT is actually payable on the transaction.
If the form is submitted over 1 year late, a tax-geared penalty up to the amount of SDLT due may be imposed
What do the threshold and applicable rates for paying SDLT depend on?
Whether the property is residential or non-residential/mixed-use property
What are the residential rates and percentages for SDLT?
Up to £250,000 - 0%
£250,001 - £9250,000 - 5%
£925,000 - £1.5 million - 10%
Over £1.5 million - 12%
What are the non-residential rates and percentages for SDLT?
Up to £150,000 - 0%
£150,001 - £250,000 - 2%
Over £250,000 - 5%
What happens if a person already owns a residential property + buys an additional residential property? When do they not apply?
An additional 3% is charged in each band on the purchase of additional residential properties.
These higher rates aren’t charged for transactions under £40,000.
They do not apply or, in some cases, are charged but refunded if the new property replaces the purchaser’s only or main residence.
How is SDLT chargeable on the grant of a new lease?
The tax may be payable on either or both of any lease premium paid, and the net present value of the rent payable to the landlord over the entire lease term.
The tax for each part is calculated separately.
The rates of tax on lease premiums are the same as the usual rates, but the rates on the net present value of the rent are lower
What SDLT reliefs are there?
- Relief for purchase of first residence
- Linked transactions:
- mean consideration
- 6 or more residential properties
What relief is there for individuals purchasing their first property?
There is relief from the standard residential rates for individuals purchasing their first property as their main or only residence for consideration of up to £625,000.
The rates which apply are 0% on consideration up to and including £425,000, with 5% on any remainder up to £625,000.
If the consideration exceeds £625,000, no relief is given + the usual rates apply
