Property Practice - Stamp Duty Land Tax

Question 1

Return

Answer 1

To be filed within 14 calendar days of completion even if no SLDT is due

Question 2

Tax payable

Answer 2

On purchase price of the property (inclusive of VAT)

Amount of tax payable based on money or money’s worth - can be paid on any form of consideration given (e.g. mortgage, work performed)

Question 3

Exempt transactions

Answer 3

• Property transferred as a gift
• Property transferred to a spouse or former spouse on divorce
• Property transferred under a variation of a will within two years of the decedent’s death

Question 4

Rates

Answer 4

• Depend on whether land for residential or non-residential properties and value of consideration
• Bands are:
• 0%: up to £250k (residential); up to £150k (non-residential)
• 2%: £150,001 - £250,000 (non-residential only)
• 5%: £250,001 - £925,000 (residential); Over £250k (non-residential)
• 10%: £925,001 - £1.5m (residential only)
• 12%: Over £1.5m (residential only)
• If a person already owns a residential property and buys an additional residental property an additional 3% is charged in each band (including nil rate bracket) - higher rates not charged for transactions under £40,000

Question 5

Leases

Answer 5

SDLT owed on premium and on net present value of rent payment

Question 6

Premium

Answer 6

Taxed the same way as residential or commercial sales

Question 7

Net present value

Answer 7

Rates will be given in the exam but are:

• 0% for first £150k
• 1% for NPV amounts greater than £150k but not more than £5m
• 2% for amounts over £5m

Question 8

Reliefs

Answer 8

1. First-time buyer relief: provided it will be used as main or only residence
2. Multiple dwellings relief
3. Six or more residential properties

Question 9

First-time buyer relief

Answer 9

• 0% on first £425,000
• 5% rate on any remainder up to £625,000
• Normal rates if cost greater than £625,000 (i.e. no relief applies)

Question 10

Multiple dwellings relief

Answer 10

• SDLT calculated on average (mean) price paid
• SDLT then multiplied by number of properties purchased
• Paid on account of each property as if it was purchased separately
• Each band increased by 3% as multiple residential properties being purchased

Question 11

Property given in exchange for shares in a company

Answer 11

Amount of SDLT payable based on the fair market value of the land

Question 12

Penalties

Answer 12

Interest may be charged if SDLT paid late

Penalty may be imposed if the land transaction form is submitted late (irrespective of whether SDLT is actually payable):

• Up to three months late: penalty of £100 is automatically imposed
• Over three months late: penalty of £200 is automatically imposed
• Over one year late: penalty up to the amount of SDLT due may be imposed

Question 13

Six or more residential properties

Answer 13

• If six or more residential properties are purchased in a single transaction the purchaser can choose to apply the non-residential property rates