Property Tax

Question 1

When must SDLT be sent after completion?

Answer 1

within 14 days of completion, even if no SDLT due

Question 2

When must SDLT be paid?

Answer 2

within 14 days of completion

Question 3

Is SDLT based on VAT inclusive amount of purchase price?

Answer 3

Yes

Question 4

Nil rate band

Answer 4

£325,000

Question 5

Residential nil rate band

Answer 5

£175,000

Question 6

Residential nil rate band taper

Answer 6

£2 million
RNRB is reduced by half of value over £2m

Question 7

How does owning second/additional properties affect tax?

Answer 7

Additional 3% on each tax band. Nil rate band is now 3% instead of 0%. Doesn’t apply if new home is replacing only dwelling so they will only have 1.

Question 8

SDLT on lease?

Answer 8

Charged on grant of a new lease. Based on lease premium and net present value of the rent payable over the term.

Question 9

SDLT for first time buyers

Answer 9

Up to £300,000 0%
£300-£500,000 5%
Property must not be more than £500,000 for this relief

Question 10

Definition of 1st time buyer

Answer 10

Never owned any interest in residential property in UK or anywhere in the world

Main residence

Question 11

Standard SDLT

Answer 11

Applies to properties over £250,000

Up to £250,000 0%

The next £675,000 (£250,001 to £925,000) 5%

The next £575,000 10% (£925,001 to £1.5m)

The remaining amount 12% (above £1.5m)

Question 12

What tax do you pay if more than one purchase in linked transaction, residential property?

Answer 12

Can decide to pay tax on mean average (consideration of all houses/number of houses) rather than the actual consideration for each house.

Question 13

SDLT if 6 or more properties in single transaction?

Answer 13

Can choose to apply non residential SDLT, lower than residential

Up to £150,000 0%

The next £100k (£150,001 to £250,000) 2%

Remaining amount 5% (above £250,000.

Question 14

Are contents part of purchase price?

Answer 14

Not likely to be valued separately unless very valuable, designer furniture.

Doesn’t form part of purchase price or SDLT

Question 15

Is their first time buyers relief in Wales?

Answer 15

No

Question 16

LTT thresholds

Answer 16

£225,000 for residential or non residential unless you own another property

Up to 225k 0%
£225,001 to £400,000 6%
£400,001 to £750,000 7.5%
£750,001 to £1.5m 10%
Over £1.5m 12%

Question 17

Purchase price of £800k, non residential property. Calculate SDLT.

Answer 17

800k - 150,000 (non residential NRB) = 650,000
0.02% of 100k=2k
0.05% of 550k = 27,500

SDLT= 0 + 2 + 27,500 = 29,500

Question 18

Purchase price of £1m,residential property. Calculate SDLT.

Thresholds (just for the eg)
Up to 125k 0%
125k to 250k 2%
250k to 925,000 5%
925,000 to 1.5m 10%
Over 1.5m 12%

Firs time buyers relief doesn’t apply to non residential proprty

Answer 18

£43,750
£125,000 =0
125,000 at 2%=2500
675,000 at 5%=33,750
75,000 at 10%=7500

Question 19

Wales first time buyer, residential property, £190,000.

Thresholds (for example):
Up to £180k 0%
£180k to £250k 3.5%

Answer 19

£350
Wales doesn’t have first time buyers relief

Question 20

What is VAT charged on?

Answer 20

Good and services by taxable person during course of business

Question 21

When is VAT paid?

Answer 21

Every 3 months to HMRC

Question 22

How much is VAT?

Answer 22

20% for most things (some are exempted or 0%)

Question 23

Output and input tax?

Answer 23

Output on what you supply. Input, what you purchase for the business. Can minus input from output and send the difference to HMRC.

Question 24

When should you register for VAT?

Answer 24

Earning over 85k in 12 month period or expected to exceed this in following 30 days.

Question 25

Why would you register for VAT if earning less than 85K?

Answer 25

Offset input tax

Question 26

What are exempt supplies?

Answer 26

Not taxable for VAT, can't offset input tax. e.g. residential property (except new builds) and commercial property over 3 years old if owner has opted not to tax.

Question 27

Zero rated supplies?

Answer 27

Residential newbuilds, buyer doesn't pay VAT, seller can still recover input tax.

Question 28

When will standard 20% of VAT usually be charged?

Answer 28

Newly constructed commercial property (less than 3 years), older commercial property (more than 3 years) if company opted to tax. Tenants would also have to pay VAT in their rent.

Question 29

When can voluntarily opting into VAT if earning less than 85k be revoked?

Answer 29

Commercial property, if not used for 6 months. Construction work is usually taxed at 20% unless lower rate applies.

Question 30

When can you deregister from VAT?

Answer 30

Less than 83,000 for 12 months and when ceased trading (a must)

Question 31

When can you revoke option to tax?

Answer 31

Within 6 months of decision if no VAT charged. 20 years after option to tax has been in place.

Question 32

What should be included on tax invoice?

Answer 32

VAT number, tax point, value of supply, rate of tax charged.

Question 33

Calculate VAT on £120 (inclusive of VAT)

Answer 33

120=6= £20 VAT

Question 34

What is a capital gain?

Answer 34

Profit when disposing (sale/gift) of asset. Difference between sale price/current value and cost of acquiring it (cost of capital improvements)

Question 35

What is CGT charged on?

Answer 35

All gains in tax year 6 April to 5 April, due on or before 31Jan following tax year. Penalties for late payment.

Question 36

When is CGT not payable?

Answer 36

Gifts to spouse/civil partner

Question 37

What kind of property is CGT charged on?

Answer 37

Property that is not main home. Property that has been used for business, let out or very large.

Question 38

Dwelling house exemption/Private residence relief

Answer 38

Wont pay CGT if: you have one home and have lived in it as main home whole time not let part of it (not incl lodger) not used part of it exclusively for business (occasional home office doesn't count) the grounds and all builidngs are less than 5k sqm you did not buy home to make a gain

Question 39

Calculating actual occupation/allowed period of absence?

Answer 39

- 1st 12 months of ownership (facilitate sale of another property/refurb) - Any period of 3 years not living there - Any period where owner wasn't working in UK - Up to 4 years living elsewhere in UK for work - last 9 months of ownership May only be entitled to partial relief if absences outside of these conditions

Question 40

CGT rates and income thresholds

Answer 40

If taxable income + CG is less than 50,000 (Basic rate band) CGT is 18% Pay 28% on any amount above basic tax rate band (50,000) For residential property, otherwise 10 and 20%.

Question 41

Calculating CGT. CG of 228,000, allowances already deducted. Taxpayer's income is 45,000. No private residence relief applicable (e.g. buy to let)

Answer 41

228k +45k =273k (higher rate tax band) CG under 50k taxed at 18% (5k to be taxed at 18%, cuz taxable income was already 45k) £900 228k-5k=223,000 223,000 taxed at 28%, £62,440. CGT is 900+62440 =63,340

Question 41

Do you pay CGT if property sold at a loss?

Answer 41

No