Chapter 7 - Stamp Duty

Question 1

Stamp Duty Land Tax

Answer 1

• Tax on land considerations
• Paid by the purchaser, not the seller, within 14 days of effective date of transaction
• Paid under self-assessment procedures
• Solicitor normally completes the forms

** NB – For residential land / property, temporary amend to 0% band applies until 30 September 2021 – 0% threshold is £250,000. The table above and the first-time buyer rules below will come back into full effect on 1 October 2021 **

• For first-time buyers, no SDLT is payable on the first £300,000 of the property’s purchase price, providing the total purchase price is less than £500,000. No relief is available where the property’s purchase price exceeds £500,000.

This relief now includes qualifying shared ownership property purchases. The first £300,000 of the initial share bought is not liable to SDLT, the remainder is charged at 5% of the excess. There is no relief on further shares bought, nor where the
purchase price is over £500,000. There is no liability to SDLT on the lease.

• SDLT is paid at the rate of tax on the part of the purchase price within each tax band
• 15% applies to the whole purchase price for corporate bodies buying residential
  properties costing over £500,000
• If homes are exchanged without cash payment, SDLT paid on market value
• SDLT is not paid on any part of the purchase price that is for carpets, furniture
  etc/however cannot put high value on these to avoid paying as HMRC would challenge
• 3% (4% in Scotland and Wales) surcharge for additional residential properties in excess of £40,000
  o Does not apply if main residence being replaced. Although charge made if former
  main residence not sold at same time – refund can be claimed if sell within 36
  months (18 months in Scotland)
  o If main residence not replaced, charge determined by number of properties
  owned at end of day of transaction (if 2 or more there will be a charge)

Question 2

Land and Buildings Transaction Tax (LBTT)

Answer 2

• Replaced SDLT in Scotland
• LBTT is only paid at the rate of tax on the part of the purchase price within each band
• For both residential and non-residential properties
• 0% on first £145,000, rising in steps thereafter up to 12%
• First time buyers pay 0% on first £175,000
• Administered by Revenue Scotland

Question 3

Land Transactions Tax (LTT)

Answer 3

• Replaced SDLT in Wales

- 0% on first £180,000, rising in steps thereafter up to 12%

Question 4

Stamp Duty and Stamp Duty Reserve Tax

Answer 4

• Payable on documents that transfer ownership of shares, stocks and unit trusts
• Stock transferred electronically through a stockbroker pay stamp duty reserve tax
• Rate is 0.5% of consideration paid
• Stamp duty is rounded to the nearest £5
• SDRT is rounded to the nearest penny
• Stamp duty transactions of less than £1,000 are exempt
• Payable by the purchaser
• Abolished on share transactions for companies listed on growth markets such as AIM
• Stamp duty and SDRT are incidental costs and are deducted from CGT gains