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Tax 7: Stamp Duty Tax Flashcards

(10 cards)

1
Q

When is stamp duty tax due?

A

Return
- due 14 calendar days after completion
- still necessary if payment is not due

Payment
- due 14 calendar days after completion

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2
Q

Is stamp duty only due if property was paid for in money?

A

No. Tax is based on consideration exchanged for property (including VAT if applicable)

Can include
- value of work given in consideration
- value of other property given as consideration
- amount left on a mortgage taken over by transferee

Consideration in Shares
- if land/building are transferred to company in exchange for shares (eg. incorporation)
- transaction deemed to be made at market value

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3
Q

What are exempt transactions for Stamp Duty Land Tax?

A
  • property transferred as gift
  • property transferred to a spouse/former spouse under divorce proceedings
  • property under assent
  • property transferred under a variation of a will changing the beneficiary entitled to the property within 2 years of death
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4
Q

What are the penalties of late payment of SDLT or late return form?

A

payment
- interest may be charged on SDLT

Late land transaction form
- up to 3 months late = £100 penalty automatically imposed
- over 3 months late = £200 penalty automatically

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5
Q

How much is SDLT?

A

Exact figures given in exam
- uses bracket system

Additional Residential Purchases
- if second+ home or buy to let is bought
- additional 3% charged on each band (including nil rate bracket)
- only if transaction is over £40k

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6
Q

How is SDLT taxed on leases?

A

Only on new leases

Two calculations
- one for lease premium
- one for net present value (given in exam)

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7
Q

What reliefs are there for SDLT?

A

Relief for Purchase of first residence

Linked Transactions Relief

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8
Q

How does SDLT Relief for Purchase of first residence work?

A

Applies if buying first property as main or only residence for consideration up to £500k
- 0% tax on first £300k
- 5% tax on remainder

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9
Q

How does SDLT Relief for linked transactions work?

A

For when purchaser of residential property acquires more than one dwelling via linked transactions (for example a building with multiple flats)
- remember the additional 3% increase on each level as buying additional residential homes

Paying Tax on each unit
- can pay tax on each unit separately using the mean consideration (total consideration divided by number of dwellings)
- plus the 3% on each as buying additional residential transactions

Non-Residential Property Tax
- if buying 6+ residential properties as linked transactions can choose to apply non-residential property rates
- will not pay the 3% for buying additional residential transactions
- cannot apply above rule of paying tax on units separately

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10
Q
A
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