U8. Taxiation

Question 1

When is Stamp Duty Land Tax Paid or Land Transaction Tax Paid?

Answer 1

Paid by the Buyer/ Tenant on all Land Transactions.

1. Both Residental and Commerical Properties
2. Buying or Grant or Assignment of lease

Buyer Pays

Question 2

Which party pays SDLT or LTT

Answer 2

Buyer

Question 3

Is Vat Charged on residental properties

Answer 3

No, just commerical

Question 4

Who Pays Capital Gains Tax / Corporation Tax

Answer 4

Sellers of properties that are not their main residence under the dwelling house / private house relief

Individuals pay CGT

Companies pay CT

Question 5

Who pays income tax / corporation tax

Answer 5

Landlords pay this on the income from rent

Individuals pay Income tax

Companies pay Corporation Tax

Question 6

What is the diffrence between Stamp Duty Land Tax and Land Transaction Tax?

Answer 6

Stamp Duty Land Tax is for England

Land Transaction Tax is for Wales

Question 7

What are the Stamp Duty Land Tax Rates for residential purchases?

Answer 7

First £250,000 - 0%

£250,001 - £925,000 = 5%

£925,001 - 1.5m = 10%

1.5m+ = 12%

Question 8

When is an Stamp Duty Land Tax Additional Property Rate paid for residential purchases?

Answer 8

Where the buyer will own more than 1 property on completion.

The existing property and the new property both need to be more than £400,000

if the second property is sold within 36 months, a refund is claimed

Question 9

What are the Stamp Duty Land Tax rates for commercial properties.

Answer 9

up to £150,000 = 0%

£150,001 - £250,00 = 2%

£remaining amount above £250,000 = 5%

If VAT Is payable, SDLT is Payable on the VAT Inclusive amount.

Question 10

What is the stamp duty land tax rate for non uk residents ?

Answer 10

2% on the normal rate

DOES NOT APPLY IN WALES

Question 11

What is first time buyer relief?

Answer 11

For propertys costing no more than £625,000, First time buyers only pay tax on property’s worth more than £425,000 at 5%

FIRST TIME BUYER RELIEF DOES NOT APPY IN WALES

Question 12

Does first time buyer releif and and Non Uk Resident extra charges apply in wales?

Answer 12

NO

Question 13

When must Stamp Duty Land Tax be paid for by?

Answer 13

Paid within 14 days of completion or tenants move in date

Question 14

When must LLT be paid by?

Answer 14

30 days of completion.

Question 15

What is the 0% tax threshold for SDLT v LTT

Answer 15

SDLT Up to £250,000

LTT - £225,000

Question 16

What is the name of the form used to show SDLT has been paid to register the property / disposition and HM Land Registry?

Answer 16

SDLT 5

Question 17

What is the name of the form used to show LTT has been paid and to register the property / disposition at HM Land Registry

Answer 17

WRA Certificate

Question 18

What are the return forms for SDLT and When are they required?

Answer 18

Required for transactions worth more than £40,000

	SDLT 1 - Normal Form 
	
	
	SDLT 2 - More than 2 buyers or sellers 
	SDLT 3 - Additional property details  SDLT4 - Complex transactions, corporate buyers, and leases.

Question 19

What is the SDTL payable for leases?

Answer 19

Grant on a new lease = SDLT Payable on both the premium and the net present value of the lease.

Assignment of lease - None, paid when the lease was originally granted

Question 20

When is SDTL return form required for leases

Answer 20

Grant of a new lease = Required if the lease is more than 7 years and the premium is more than £40,00 and the annual rent is more than £1000

Exsisiting Lease - transactions over £40,000

Question 21

Is SDLT or LTT payable on rent when the lease is assigned?

Answer 21

No, as it would have been paid when the lease was granted.

Despite this, a SDLT or LTT return form must be sent back for transactions over £40,000

Question 22

When is a return tax form required for both LTT and SDLT for the granting of a new lease?

Answer 22

Only required if the lease is for 7 years or more, and the premium is more than £40,000 and the annual rent is more than £1000

Question 23

What is the diffrence in the calculation of tax when granting a new lease for SDLT v LTT?

Answer 23

SDLT - SDLT Payable on both the premium and the net present value of the lease.

LTT - Charged on the premium + NPV if commercial (just the premium if residental)

Question 24

When is VAT charged?

Answer 24

Vat is charged where it is a taxable supply by a taxable person

Question 25

What are the 2 taxable supplies?

What is not a taxable supply?

Answer 25

Taxable supply is:

	1. Standard Rated Suppliers 
	2. Zero Rated Suppliers 

Exempt supplies are not taxable supply

Question 26

What is a Zero Rated Supply?

Answer 26

They are still taxable supplies, but attract 0% VAT.

			1. Non Catering Food 
			2. Books 
			3. Water  4. Construction of dwellings

Question 27

What is an exempt supply?

Answer 27

Exempt suppliers are not taxable and do not attract VAT.

1. Residental Property
2. Old Commerical Property
3. Grant of a lease where an option to tax has not been made
4. Finance
5. Education
6. Health Services
7. Insurance

Question 28

What is a taxable person?

Answer 28

Someone who is registered for VAT.

Companies who value of taxable supplies exceed £85,000 must register for VAT

Question 29

What is Input Tax and Output Tax?

Answer 29

Input Tax - This is what the tax the company pays out

Output Tax - This is the tax the company charges

Where the input Input tax is more than the output tax, they can recover the VAT and get a refund 

Where the Output tax is more than the input, they must make good the difference to HMRC

Question 30

Can a company that only makes exempt supplies register for VAT and recover input tax?

Answer 30

No, only companys that also make taxable supplies can register for VAT

Taxable supplies are standard rate supplies and zero rated supplies

Question 31

When are residental properties subject to VAT?

Answer 31

The Sale of a residential property will be exempt, unless it is the sale of a newbuild property which is zero rated.

The sale of a newbuild buy to let will be exempt.

Question 32

Is VAT charged on residental property?

Answer 32

No, residental property will be exempt

However, newbuild residental property will be zero rated, while newbuild by to let with be VAT exempt

Question 33

What rate of VAT do New Commerical Properties pay?

What is a new commercial property?

Answer 33

The Automatic Standard Rate = 20%

Properties completed up to 3 years ago are new

Question 34

What VAT do Old Commerical Properties pay?

Answer 34

They are exempt, unless the seller exersises the option to tax

Question 35

What VAT is paid of the grant of a commercial lease?

Answer 35

They are exempt, unless the seller exersises the option to tax

Question 36

Why would someone opt to tax?

Answer 36

To be able to recover input tax spent on property

Question 37

When can the seller not opt to tax?

Answer 37

Where the buyer is VAT sensitive (ie only makes exempt taxable supplies)

Question 38

Is SDLT / LTT paid on the VAT inclusive or exclusive amount?

Answer 38

SDLT or LTT will be payable on the VAT inclusive amount (Essentially making it a tax on a tax)

Question 39

When does the Private Dwelling House Exemption / Private Residence Releif apply?

Answer 39

If the property is the sellers only, or main, residence throughout the period of ownership, with a garden no more than 0.5 hectares will be exempt.

Question 40

Can the Private Dwelling House Exemption apply for Capital Gains tax if the garden is more than 0.5 Hecteres

Answer 40

If the garden is larger , the capital gains will be payable on the gain relating to the size of the plot over and above this - Unless it can be argued that the garden was necessary for the reasonable enjoyment of the house (ie a large house with a proportionate large garden)

Question 41

What are the 5 allowed absences to the period of ownership for Private Residence relief for capital gains tax?

Answer 41

Occupation prior to 31 March 1982 is ignored, and the following is disregarded as ‘allowed absences’

1. The Last 9 Months of Ownership (or 36 months if disabled or resident in a care home)
2. Up to the first 24 months of ownership due to problems in selling another property or due to refurbishment or building works being carried out
3. Any period of employment where all duties are overseas
4. Up to 4 years absence required as a condition of employment, of where distance prevents living at home
5. Any other period for up to three years in total (for whatever reason) throughout the period of ownership

Question 42

Can Private Residence Releif for capital gains tax apply if part of the property is used exclusively for business use?

Answer 42

Yes, but there will be a proproitante loss of relief in respect to that area

Question 43

When is Capital Gains Tax Due?

Answer 43

Within 60 days of completion of the sale

Question 44

If someone owns more than one residence, how do we know what the main residence is for the purposes of capital gains tax?

Answer 44

If more than one property is owned, within 2 years the owner must elect one to be their primary residence.

Married Couples / Civil Partners can only elect one main residence between them.