LAND TAXES Flashcards
What is the basis of charge for:
RESIDENTIAL FREEHOLD PROPERTY (SDLT) - where they are first time buyers?
- Must be their main residence.
- The purchase price must be no more than £625,000.
- They do not pay ANYTHING up to £425,000.
- And they pay 5% on the portion from £425,000 - £625,000/.
What is the basis of charge for:
RESIDENTIAL FREEHOLD PROPERTY (SDLT) - where they are NOT first-time buyers?
- First 250,000 @ 0%
- Next chunk - 250,000 - 925,000 @ 5%
- Next chunk 925,000 - 1,500,000 @ 10%
- The remainder @12%
What is SDLT payable on?
Land (which includes fixtures) - NOT chattels.
May be possible to save SDLT by apportioning part of the purchase price to chattels - any apportionment must be a fair value or a fraud on HMRC is being committed.
What is the basis of charge for non-residential or mixed use freehold property (SDLT)?
(Commercial property)
- First 150,000 @ 0%
- Next chunk £150,000 - £250,000 @ 2%
- Next chunk over £250,000 @ 5 %
If VAT is charged - what is SDLT payable on?
The VAT-inclusive sum.
How is SDLT paid?
It is paid to HMRC - usually online by bank transfer - accompanied by a form called SDLT1 which provides the necessary details of the transaction.
Within how many days must SDLT be paid?
14 days - if it is not paid the transfer of the property to the buyer - will not be registered by the Land registry.
Also penalties and interest.
What is a main difference between LTT (Wales) and SLDT (England)?
- No relief for first-time residential buyers from LTT.
- Rates at which LTT is charged is different too.
- within 30 days of completion to return the land transaction return to the Welsh Revenue Authority whereas 14 days to HMRC.
What are the LTT rates for those buying residential freehold property?
- First £225,000 @ 0%
- Next chunk £225,000 - £400,000 @ 6%.
- Next chunk £400,000 - £750,000 @ 7.5%
- Next chunk £750,000 - 1,500,000 @ 10%.
- Remainder @ 12%.
What are the LTT rates for non-residential or mixed use freehold properties?
- First 225,000 @ 0%
- Next chunk 225,000 - 250,000 @ 1%
- Next chunk 250,000 - 1million @ 5%
- Remainder over 1m @ 6%
If VAT is charged, what is LTT payable on?
The VAT-inclusive sum.
Within how many days does LTT need to be submitted? And to whom?
Within 30 days of completion to Welsh Revenue Authority.
WHEN IS PRIVATE RESIDENCE RELIEF APPLICABLE FOR CGT?
When it is the sale of the individual’s dwelling house used as their only or main residence.
The seller MUST have occupied the dwelling house as their main residence throughout the period of ownership.
Certain periods of absence are allowed - e.g., if owner is an employee and has to live abroad or in service accommodation as part of their job.
Garden of more than 0.5 hectares - gain on the excess is chargeable to CGT unless the seller can demonstrate the extra garden was necessary for the reasonable enjoyment of the house.
How does private residence relief work if they have more than one property?
They can elect which property will qualify for PRR to HMRC.
Is private residence relief (CGT) available for trustees?
YES - available to trustees if the property is occupied by a beneficiary as their principal residence.
If you have a garden of 0.6 hectares can you claim private residence relief for CGT?
Garden of more than 0.5 hectares - gain on the excess is chargeable to CGT unless the seller can demonstrate the extra garden was necessary for the reasonable enjoyment of the house.
If part of your house is used for business purposes - how does this affect private residence relief for CGT?
The relief may be lost on any part of the house used exclusively for business use.
Who is a taxable person for VAT?
Anyone who earns over £85,000.
When and how is VAT collected?
VAT is collected by HMRC from each supplier.
It is collected at the end of each VAT period (usually every 3 months) by the supplier completing a VAT return to HMRC online.
If your business is exempt e.g., you make exempt goods and services e.g., insurance, banks and building societies - can you register for VAT and can you recover any input tax?
No you cannot register for VAT.
No you cannot recover any input tax.
What % are standard rated supplies charged at?
20%
Are zero rated supplies taxable supplies?
Yes - but they are charged at a zero rate.
Do most residential properties involve the payment of VAT?
No - the sale of a new build house by a developer is zero rated so the buyer will not pay any VAT and the subsequent sale of a residential property by a private individual will not be in the course of a business so the seller will not be charging VAT to the buyer in addition to the purchase price.
What is considered a new commercial property?
One which is within 3 years from completion of the building.
No option but to charge VAT.
