Stamp duty land tax

Question 1

what does a land transaction mean?

Answer 1

acquisition of an interest in or over land. most common examples=sale of freehold land or assignment/grant of a lease

Question 2

who is it paid by?

Answer 2

the purchaser (is an allowable expenditure for CGT which might become relevant to you!)

Question 3

when is SDLT due?

Answer 3

within 14 days of the date of completion

Question 4

where must the property be based?

Answer 4

england and NI (the residence and physical location of the purchaser is irrelevant)

Question 5

what is exempt from SDLT?

Answer 5

gifts
transactions in connection with divorce
NOTE-no exemption if sale between spouses (although this is rare)

Question 6

when an individual transfers land or property to a company which they are connected to?

Answer 6

consideration is deemed to be the market value of land at the date of the transactoin

Question 7

what can consideration include?

Answer 7

the assumption of debt, e.g the transfer of a mortgage

Question 8

if part of the consideration is contingent?

Answer 8

SDLT is charged as if the contingency will be satisfied. if this is incorrect an amended sdlt return can be filed and a repayment claimed

Question 9

a mixed use property is treated as what?

Answer 9

non residential for the purposes of the rates applied to it

Question 10

what surcharges apply?

Answer 10

2% where a non Uk resident acquires residential property (for at least 40k- which applies to the peoprty as a whole not just the buyers share)
3% when a purchaser buys a residential property while already owning one (in the UK or elsewhere)

Question 11

when does the 15% rate not apply?

Answer 11

property acquired to be used in a property rental business

Question 12

what is first time buyers relief?

Answer 12

-No SDLT up to 425k
-5% SDLT on portion of consideration from 425k to 625k
ONLY if intended to use property as their main residence. must be first home in UK and abroad. will not apply if purchased jointly and one is not a fisrt time buyer

Question 13

what applies to determine UK residence for these purposes?

Answer 13

NOT the SRT. Individual treates as UK resident where:
-physically present in UK for at least 183 days of a 365 day period,
-that 365 day period falls within a 2 year period whcih stars 1 year before the transactions and ends 1 year after the date of the transaction

Question 14

A non UK resident purchasing a second home in the UK would pay SDLT at what rate?

Answer 14

5% above the normal rate as they would have BOTH surcharges (for non res and for second home)

Question 15

releif from 3% charge if?

Answer 15

replacing main residence i.e purchasing new property before selling existing home (will pay the surcharge but then get refund if main home sold within 36 months-would file an amended return)

Question 16

the 3% surcharge applies to all what?

Answer 16

all residential property acquisitions by companies and trusts for 40,000 or more

Question 17

when can multiple dwelling relief be available?

Answer 17

when more than one ‘dwelling’ is purchased in a single transaction. ONLY applies to residential dwellings. (doesnt apply automatically-is the purchasers choice whether to claim it)

Question 18

what does MDR do?

Answer 18

allows SDLT rates to be applied to the average value of the collective properties instead of the total purchase price. BUT cannot be lower than 1% of the total consideration

Question 19

where a purchaser buys the remaining of an existing lease?

Answer 19

SDLT is pain in the same way as for the acquisition of a freehold interest

Question 20

where a new lease is acquired?

Answer 20

SDLT is baded on the ‘premium paid’ and the rent due under the terms of the leas (this is the NPV of rents which will be given to you).

Question 21

If a property is transferred into/out of a trust?

Answer 21

No SDLT liability as no consideration will pass

Question 22

trusts are generally subject to …

Answer 22

3% surcharge on acquisitions of residential property (SDLT rates increase by 3% on each band). BUT doesnt apply to bare trusts unless the beneficiary has another residential property

Question 23

when are trustees of an IIP not automatically liable to the 3% surcharge?

Answer 23

beneficiary is treated as the buyer if the trust acquires property and the beneficiary is entitled to either:
-occupy the property for life
-receive income from the property
So in above cases only the surcharge if the life tenant owns another resi prop. If life tenant is under 18, the childs parents are treated as the buyers

Question 24

when are trusts non UK resident for SDLT?

Answer 24

if any trustee is a non-UK resident under the SDLT residence tests. non resident trusts will normally be liable to both the 2% non resident surcharge and the 3% higher rate charge because it is a trust

Question 25

when must a SDLT return be submitted?

Answer 25

even if no tax payable e.g because they are in the 0% band. must be delivered within 14 days of date of completion-normally made online but a paper options is also available. payment of tax should also be made within 14 days. amended return can be filed within 12 months of the filing date

Question 26

what is charged on the tax paid late?

Answer 26

interest but thee are no late payment penalties for SDLT. there are penalties if the return is filed late.

Question 27

no land transaction return is required for?

Answer 27

-transactions where there is no chargeable consideration,
-transactions in connection with divorce,
-variations of wills etc after death.