Is there stamp duty on a house won in a raffle?

sima_2

I really enjoy this forum and even though I am usually quite nervous about participating, I am finding this whole Devon property raffle thing fascinating so I have to ask someone...

Isn't stamp duty only paid if there is 'consideration'? That is, stamp duty is only payable if payment is made for a property.

I ask because the promoters of this lottery are saying they need an extra £200,000 to cover costs, including stamp duty (£40k?) - but the Devon property will change hands for zero value?

Any experts out there able to advise?

BTW, their costs seem to be higher if there is no stamp duty, that is the property doesn't change hands - e.g 35% of their ticket sales, which equates to £352,800 based on the current ticket count of 40,320?

poppysarah

LOL
I don't see how the vat man and tax man won't get their slice.

GDB2222

Surely, there is consideration, the value of all those lottery tickets?

sima_2

poppysarah wrote: »

LOL
I don't see how the vat man and tax man won't get their slice.

I agree, but I don't think there is any stamp duty to pay when you win a property in these newspaper 'win this cottage' competitions?

But I think there is VAT to pay as another post on this forum said they processed payments through a business account, but their is no reference to VAT and the sums don't add up so I don't think they are paying VAT - I make VAT on £1.15m to be about £171,276.

Am I missing something (or are my sums wrong)?

sima_2

GDB2222 wrote: »

Surely, there is consideration, the value of all those lottery tickets?

The person winning is not going to be paying any money to have the property registered in their name - therefore no consideration.

The ticket sales are revenue that the promoters keep in exchange for handing over the property for nothing.

Kez100

Had a feeling stamp duty was chargeable on the document (contract) and then linked somehow to value. So, quite possible SD will be payable.

sima_2

Kez100 wrote: »

Had a feeling stamp duty was chargeable on the document (contract) and then linked somehow to value. So, quite possible SD will be payable.

Just checked the Government site and it's based on purchase price... so still can't find the link

Residential property - purchase price Rate of Stamp Duty Land Tax up to £175,000 (until 2 September 2009 inclusive) 0% £175,001 - £250,000 1% £250,001 - £500,000 3% £500,001 or more 4%

chewmylegoff

sima wrote: »

I really enjoy this forum and even though I am usually quite nervous about participating, I am finding this whole Devon property raffle thing fascinating so I have to ask someone...

Isn't stamp duty only paid if there is 'consideration'? That is, stamp duty is only payable if payment is made for a property.

I ask because the promoters of this lottery are saying they need an extra £200,000 to cover costs, including stamp duty (£40k?) - but the Devon property will change hands for zero value?

Any experts out there able to advise?

BTW, their costs seem to be higher if there is no stamp duty, that is the property doesn't change hands - e.g 35% of their ticket sales, which equates to £352,800 based on the current ticket count of 40,320?

stamp duty is payable on the transfer of qualifying assets from one party to another.

i think stamp duty would definately be payable. where the asset does not change hands at market value, a professionally qualified person (in the case of a house a surveyor) will need to assign a market value to the asset, and then stamp duty is based on that market value, rather than the price paid.

in the same way that you can't pay £1 for a house and £999,999 for fixtures and fittings to evade stamp duty, you can't get around it by organising a competition.

sima_2

Good grief - you need a lawyer to translate the HM Revenue and Customs site...

This is the only thing I can find

SDLT is charged where an interest in land is transferred for consideration. Consideration will include

• any cash payment and
• any assumption of liability to pay a mortgage. The liability assumed is taken to be a proportion of the outstanding mortgage corresponding to the proportion of the share of the property which is acquired.

If there is no SDLT then God knows HM Revenue & Customs don't want to make it obvious...

chewmylegoff

sima wrote: »

Just checked the Government site and it's based on purchase price...

it's only based on the purchase price where the transaction is an arms length transaction conducted at market value. otherwise the market value needs to be assessed.

dudes_2

http://www.sourcewire.com/releases/rel_display.php?relid=LXLLL