Chapter 7 - Stamp Duties Flashcards
When would stamp duty land tax be payable following the transfer of ownership of a property?
a. The purchase of a commercial property for £145,000.
b. The transfer of ownership of a house from husband to wife as part of their divorce settlement
c. The exchange of two properties, both valued at £550,000, between two owners without any cash
changing hands.
d. The purchase of a flat for £130,000 where the carpets, curtains and domestic appliances have been valued at £6,000.
c. The exchange of two properties, both valued at £550,000, between two owners without any cash
changing hands.
•Sometimes two owners exchange houses, with or without a cash balance payment. This does not save SDLT. Each person pays SDLT on the market value of the property acquired.
Stamp duty land tax rates
• Residential
Up to £250,000 = 0%
£250,001 to £925,000 = 5%
£925,001 to £1,500,000 = 10%
Above £1,500,000 = 12%
•Non-residential
Up to £150,000 = 0%
£150,001 and £250,000 = 2%
Above £250,000 = 5%
Ulla has recently bought a new house and the effective date of the transaction was 7 November 2023. What is the latest date by which the stamp duty land tax must be paid?
a. 21 November 2023.
b. 7 December 2023.
c. 14 November 2023.
d. 28 November 2023.
a. 21 November 2023.
•The person who acquires an interest in land must complete a SDLT return and pay the duty within 14 days of the ‘effective date’ of the transaction.
• The effective date is usually completion. However, if the purchaser has paid for, or taken possession of, the property before completion, the date of payment or possession is the effective date.
Angela sold £12,744 worth of shares which were held in her stockbroker’s nominee account. How much stamp duty reserve tax, if any, would she be responsible for paying on this transaction?
a. £63.72
b. NiL
c. £63.71
d. £65
b. NiL
•The stockbroker acting for the purchaser is usually responsible for paying SDRT to HMRC. The amount payable is shown as a deduction on the stockbroker’s contract note.
Giles purchased shares valued at £12,500 via his stockbloker, How much stamp duty reserve tax, if any, will be payable on this transaction?
a. £65
b. £62.50
c. £63
d. NIl
b. £62.50
Stamp duty is payable on documents (such as stock transfer forms) that transfer ownership of shares, stock and unit trusts. an equivalent tax called stamp duty reserve tax (SDRT) is charged on the agreement to transfer shares.
.The rate of stamp duty and SDRT is 0.5% of the consideration paid for the shares, whatever their value.
. Stamp duty is rounded up to the nearest £5 while SDRT is rounded to the nearest penny.
Who is normally responsible for paying the stamp duty reserve tax to HMRC following the purchase of shares?
a. The seller.
b. The purchaser.
c. The broker acting for the seller.
d. The broker acting for the purchaser.
d. The broker acting for the purchaser.
•Stamp duty is payable by the purchaser.
•The stockbroker acting for the purchaser is usually responsible for paying SDRT to HMRC. The amount payable is shown as a deduction on the stockbroker’s contract note.
Tracey and Olivia, who both live in Derbyshire, have recently exchanged houses. Tracey’s house was valued at £280,000 and Olivia’s house was valued at £305,000. In view of the price difference Tracey paid Olivia a cash lump sum of £25, 000. How much stamp duty land tax, if any, will be payable in total as a result of the exchange?
a. £5,500.
b. £1.250.
c. Nil.
d. £4.250
d. £4.250
•Sometimes two owners exchange houses, with or without a cash balance payment. This does not save SDLT. Each person pays SDLT on the market value of the property acquired.
Stamp duty land tax rates
• Residential
Up to £250.000 = 0%
£250,001 to £925,000 = 5%
£925,001 to £1,500,000 = 10%
Above £1,500,000 = 12%
•Non-residential
Up to £150,000 = 0%
£150,001 and £250,000 = 2%
Above £250,000 = 5%
£280,000 - £250,000 = £30,000
£30,000 x 0.05 = £1,500
£305,000 - £250,000 = £55,000
£55,000 x 0.05 = £2,750
£1,500 + £2,750 = £4250
Anita purchased shares valued at £16,300 via her stockbroker. How much stamp duty reserve tax, if any, will be payable on this transaction?
а £85.
b. Nil
c. £82
d. £81.50.
d. £81.50.
•The rate of stamp duty and SDRT is 0.5% of the consideration paid for the shares, whatever their value.
• Stamp duty is rounded up to the nearest £5 while SDRT is rounded to the nearest penny.
Camilla has just made these investments: £10,000 in a UK-domiciled exchange-traded fund. £10,000 in a unit trust and £10,000 in FTSE 100 company shares. Her stamp duty reserve tax liability is:
a. £50 for the exchange-traded fund, £50 for the unit trust and nil for the FTSE 100 shares:
b. nil for the exchange-traded fund, £50 for the unit trust and £50 for the FTSE 100 shares.
c. nil for the exchange-traded fund, nil for the unit trust and £50 for the FTSE 100 shares.
d. nil for the exchange-traded fund, £50 for the unit trust and nil for the FTSE 100 shares.
b. nil for the exchange-traded fund, £50 for the unit trust and £50 for the FTSE 100 shares.
Stamp duty is payable on documents (such as stock transfer forms) that transfer ownership of shares, stock and unit trusts.
Shares bought through a stockbroker are usually transferred electronically, so there is no stock transfer form. On these kind of paperless transactions, an equivalent tax called stamp duty reserve tax (SDRT) is charged on the agreement to transfer shares.
• Because the question only refers to STRT, it’s only the shares that are applicable charged at 0.5% rounded to the nearest penny
David, a first-time buyer, purchases his new home in England for £450,000. The value of the property is £430,000 and the previous owner also leaves £20.000 worth of furniture and appliances. How much stamp duty land tax will David have to pay?
a. £250
b. £1250
C. £6500
d. £11,500
a. £250
SDLT relief for first-time buyers
Up to £425,000 = 0%
£425,001 to £625,000 = 5%
Anything above £625,000 is then treated as normal rates so goes back to the standard
• Residential
Up to £250.000 = 0%
£250,001 to £925,000 = 5%
£925,001 to £1,500,000 = 10%
Above £1,500,000 = 12%
£430,000 - £425,000 = £5000
£5000 x 0.05 = £250
For capital gains tax purposes, stamp duty and stamp duty reserve tax are:
a. added to the chargeable gain.
b. part of the incidental costs of sale.
c. part of the incidental costs of acquisition.
d. added to the sale price.
c. part of the incidental costs of acquisition.
For capital gains tax (CGT) purposes, stamp duty and SDRT are part of the incidental costs of acquisition and so, can be deducted in calculating the chargeable gain on any subsequent disposal.
Imogen purchased some eligible securities on AIM using a stock transfer form, sold some FTSE 100 shares through CREST and bought some gilts. To which stamp duty(ies), if any, was she liable?
A. None.
B. Stamp Duty only.
C. Stamp Duty Reserve Tax only.
D. Stamp Duty and Stamp Duty Reserve Tax.
A. None
Stamp duty is payable on documents (such as stock transfer forms) that transfer ownership of shares, stock and unit trusts.
Shares bought through a stockbroker are usually transferred electronically, so there is no stock transfer form. On these kind of paperless transactions, an equivalent tax called stamp duty reserve tax SDRT) is charged on the agreement to transfer shares.
• Share transactions for companies listed on growth markets such as AIM and the Aquis Stock Exchange (AQSE) Growth Market are not subject to stamp duty or SDRT.
• UK-domiciled exchange-traded funds are also exempt from stamp duty and SDRT.
This says it sold the shares of the FTSE 100 and so there is no SD due
No SD or SDRT is payable on a GILT
- Scott is about to buy his first residential property in Oxford for £945,000 which includes £30,000 for fittings. Assuming this is his only property, how much stamp duty land tax would be payable?
A £27,000
В £30,250
C £33,250
D £35,750
C £33,250
SDLT is not payable on any part of the purchase price that is attributable to such things as carpets, curtains and any other free-standing furniture and domestic appliances that the vendor will leave in the property.
SDLT for regular buyers
£0 - £250,000 = 0%
£250,001 - £925,000 = 5%
£925,001 - £1,500,000 = 10%
£1,500,001+ = 12%
SDLT for first time buyers
£0 - £425,000 = 0%
£425,000 - £625,000 = 5%
Normal rates of SDLT are paid on first time purchases on the full amount when the house costs over £625k
£945k - £30k = £915k
£915k - £250k (tax free amount) = £665000
£665000 x 0.05 as the remainder comes under the next tax bracket of 5% = £33,250
Cleo, a first-time buyer, buys a flat in England on 1 December 2023 for £252,950. How much Stamp Duty Land Tax (SDLT) will be payable?
Correct. As a first time buyer, Cleo benefits from SDLT relief and pays no SDLT when buying a residential property costing £425,000 or less. The amount due is therefore EO. - Chapter 7, Section A2, Learning Outcome 1.7
Rebecca and Sally’s relationship has broken down. Rebecca has now moved out of the house they bought together, and Sally will be taking over the property. Sally paid Rebecca £24,000 and the joint mortgage was for £185,000. On what amount does Stamp Duty Land Tax have to be considered for Sally?
£116,500
SDLT is based on the market value of the property acquired. Sally has acquired property valued at £116,500, i.e., half the mortgage of €185,000 = £92,500 plus the £24,000 paid in cash = £116,500. However, as this is under
£250,000, no SDLT is actually payable. - Chapter 7, Section A1, Learning Outcome 1.7
How much SDRT is payable on the purchase of a £10,000 uk domiciled ETF
None
SDRT or SD are not payable on investments on the AIM
