Stamp Duty Land Tax – are you paying the correct amount?

Published by Jo White on 8 October 2019

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Stamp Duty Land Tax (“SDLT”) is payable when buying property and or land and it has become ever more complex over the last number of years.

With the introduction of the higher 3% rate for the purchase of additional residential properties there are now potentially three SDLT sets of rates that could apply when purchasing a property in your individual name.

Where someone is acquiring a residential property then you need to understand whether they and any joint purchaser owns an interest in another residential property to see if the surcharge rates will apply. The other property could be anywhere else in the world. If you, as the purchaser, are married or in a civil partnership then the properties owned by the other party to your relationship will need to be considered also.

If you are purchasing a residential property with a large amount of land or another type of property in situ then it may be considered non-residential for the purposes of SDLT. This is especially beneficial should you be subject to the higher 3% rates on initial review.

There are some planning opportunities that can be considered when assessing the amount of SDLT that is due on a transaction:

  • There could be scope to reclaim the additional 3% SDLT charge should you dispose of your previous residence within 3 years of the purchase of the new.
  • If you have previously sold your home but have taken some time to find a new then the lower rates of residential SDLT could be payable, even if you own a buy to let property.
  • If you are purchasing a residential property with a large plot of land or it is connected to a non-residential property then it may be possible to claim the lowest rates of SDLT on the transaction, or at least on a proportion of the price paid.
  • If the land transaction includes more than one single dwelling then it may be possible to reduce your SDLT exposure. This could be through looking at the reliefs for annexes in the context of the additional 3% SDLT rates or through a claim for Multiple Dwellings Relief.

The key to ensuring you are paying the correct SDLT liability is to properly review the transaction taking place and the circumstances to which the property is being acquired.

As a taxpayer you have 12 months to amend an SDLT return from its submission date, thereafter any overpaid SDLT may not be recoverable. With the filing date now being only 14 days from the date of completion (in most circumstances) the deadline for review has reduced. Our recommendation is to review the transaction ahead of completion to ensure that the SDLT return is submitted on the correct basis initially. This will require some upfront work but will likely save you time and cost in the longer term.

If you would like to discuss this topic in more detail, please contact Jo White on email here, or call her on +44(0)330 124 1399.

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