Property Taxation (SDLT,CGT)

Question 1

What 4 taxes are possible on property?

Answer 1

(1) Stamp Duty Land Tax (SDLT) / Land Transaction Tax (LTT)
(2) VAT
(3) Capital Gains Tax
(4) Corporation Tax

Question 2

For RESIDENTIAL property:

(1) What 2 taxes may be payable and who will pay them?

(2) When will a seller not pay CGT (that is typically the case)?

Answer 2

(1)
(a) BUYER - SDLT / LTT
(b) SELLER - CGT

(2) Property is their ‘Principal Private Residence’ (PPR)

Question 3

For COMMERCIAL property:

Answer 3

(1)
BUYER:
(a) SDLT / LTT
(b) VAT

SELLER:
(a) IF individul - CGT
(b) IF company - Corporation Tax

Question 4

For RESIDENTIAL property (NOT first time buyers) what are the rates of SDLT?

Answer 4

0-£250,000 - 0%
£250,001-£925,000 - 5%
£925,001 to £1.5 million - 10%
Above £1.5 million - 12%

Question 5

(1) For first time-buyers to qualify for SDLT relief what is the maximum house price?

(2) What rates of SDLT do first time buyers pay?

Answer 5

(1) £625,000

(2)
0-£425,000 - 0%
£425,000 - £625,000 5%

Question 6

What additional % of SDLT is charged for second home residential buyers (i.e. own 2 or more residential properties?

Answer 6

3%

Question 7

For COMMERCIAL property, what are the rates of SDLT?

Answer 7

£0 - £150,000 - 0%
£150,001 to £250,000 - 2%
Above £250,000 - 5%

Question 8

In a property transaction, when must SDLT be paid to HMRC?

Answer 8

Within 14 days of completion

Question 9

What are 2 key differences between SDLT and LTT?

Answer 9

(1) NO relief for first time residential buyers

(2)
SDLT - paid to HMRC within 14 days of completion
LTT - paid to HMRC within 30 days of completion

Question 10

What is the formula for calculating the ‘Chargeable Gain’ in CGT for property?

Answer 10

Price sold - Price bought - Costs acquiring/improving property

Costs acquiring / improving = e.g. surveyor fees, SDLT, renovation costs

Question 11

What rate of CGT is paid on property for:
(a) Basic rate taxpayers
(b) Higher / additional rate taxpayers

Answer 11

(a) 18%
(b) 24%

Question 12

(1) What is the primary CGT exemption for residential property?

(2) What rate of CGT will be charged on this?

Answer 12

Private Residence Relief (PRR) + 0%

Question 13

In CGT, what 5 conditions must be satisfied in order to qualify for FULL ‘Private Residence Relief’?

Answer 13

(1) Only own 1 home
(2) No part leased (UNLESS lodger)
(3) No part used SOLEY for business use
(4) Continuous occupation
(5) Garden 0.5 hectares or less (UNLESS garden is necessary for the reasonable enjoyment of house)