Legal loophole in Stamp Duty?

welshcakes

I recall hearing some time ago how a Clause can be written into the Contract of Sale whereby the Buyer can 'gift' any amount over the Stamp Duty threshhold of £125k and avoid paying any Duty at all?

Is this a semi urban myth or is it possible where both parties are satisfied with arrangement and of course the Buyer has the money to pay up as cash.

maninthestreet

Sounds like a semi-urban myth to me, otherwise everyone would be doing it.
What is the benefit to the vendor to selling the house for way below it's market value?

benood

This is a myth as far as the UK is concerned. I believe in Spain, however, it is standard practise - "Black money" as it is called accounts for >50% of the purchase price. I wouldn't have thought it was specifically mentioned in the contract - that would surely defeat the purpose.

arnie&caseysma!

I know people that have officially sold their house for £1 under the stamp duty threshold and then received a cash payment of the rest of the money in respest of 'fixtures and fittings'. Perfectly legal just that the government aren't getting their paws on it.

GabbaGabbaHey

arnie&caseysma! wrote:

I know people that have officially sold their house for £1 under the stamp duty threshold and then received a cash payment of the rest of the money in respest of 'fixtures and fittings'. Perfectly legal just that the government aren't getting their paws on it.

It is NOT perfectly legal - it's tax evasion, and carries a heavy penalty if caught.

And it's NOT the government who aren't getting their paws on it - it's you and me and everybody else here. Where do you think the money comes from to build hospitals and schools and everything else paid for through taxation?

Ian_W

arnie&caseysma! wrote:

I know people that have officially sold their house for £1 under the stamp duty threshold and then received a cash payment of the rest of the money in respest of 'fixtures and fittings'. Perfectly legal just that the government aren't getting their paws on it.

Might be different in Scotland - after all GB does look after his own BUT:
1. F&F now have to be part of the contract price, though carpets, cutains and furnishings can be sold separately. However, anything much over around £1k for these will certainly make your solicitor twitchy unless it's fully justified.
2. I'm told transaction close to threshold points [and even a Scot would consider £1 close ] are often scrutinised by HMRC.
3. If as seller you sign and exchange a contract for £1 under the threshold and the buyer tells you on completion day they haven't got the £20K they agreed for your water-bed and half a dozen moth eaten carpets what are you going to do? You have to complete on your house for the price in the contract, perhaps you could sue for money which was being paid as a form of tax evasion?

Sounds good stuff for bragging rights at the pub :beer: but a bit more difficult in practice methinks.

To the OP - think about it. If you could gift the money in the contract everyone would do it and no stamp duty would be collected. Don't you think the Chancellor might cotton on rather quickly and change the law? :rotfl:

jamesn_2

welshcakes wrote:

I recall hearing some time ago how a Clause can be written into the Contract of Sale whereby the Buyer can 'gift' any amount over the Stamp Duty threshhold of £125k and avoid paying any Duty at all?

Is this a semi urban myth or is it possible where both parties are satisfied with arrangement and of course the Buyer has the money to pay up as cash.

It may well happen but it is definitely tax evasion. Money 'under the table' which isn't declared will not be taxed. Your solicitor would be obliged to report you to HMRC if they found out. You would also have no comeback if the money 'under the table' did not appear after the sale...

h4nym

GabbaGabbaHey wrote:

Where do you think the money comes from to build hospitals and schools and everything else paid for through taxation?

Most schools and hospitals built under this shambolic government have been built under PFI - so in answer to your question, the money is going to come from taxing our pensions and our childrens' income.

Everything else? Well - a recent study comparing public and private sector productivity since 1997 suggested that if the public sector had been subjected to the same financial discipline as the private sector, current public services would be delivered for 63.5 billion pounds less than this shower have managed. That's not cuts, that's the SAME CURRENT public services. That's an extra 12% on all our taxes simply because this shambles isn't competent enough, or doesn't care enough, to keep a lid on it.

Remember when VAT was put up from 15% to pay for a £100 cut in everyone's poll tax? Well - Council Tax has doubled under this government - an average INCREASE of over £500 - and we still have VAT at 17.5%.

I'm just waiting now for my daughter to pop out of the other side of university before I'm off to less taxing climes. And before you ask, I'm paying for her private education from my taxed income.

H

Ian_W

And I'm sure you have a private GP
and a private police force
and if you're involved in an accident you'll have private paramedics and a private casualty dept on tap as well.

Actually I don't disagree that we're over-taxed but I do disagree with breaking the law whether you agree with that law or not. The banks make huge profits out of the public - good reason for bank robbery?

I say return to the good old days of Maggie when the Tories had a low tax regime. Well I would, except the right wing Adam Smith institute's "Tax Freedom Day" shows during the 80's and early 90's it ranged from the 1-15 June whereas since '97 it has been 25 May and 4 June, this year it's actually 3/6, which is actuallyLOWER than most years under Mrs T.
https://www.adamsmith.org/tax/short-history.php

I'm not defending this government, dislike them with a passion TBH, but you really shouldn't believe what you read in the Mail or Express.

Tootsie_Roll

welshcakes wrote:

I recall hearing some time ago how a Clause can be written into the Contract of Sale whereby the Buyer can 'gift' any amount over the Stamp Duty threshhold of £125k and avoid paying any Duty at all?

Is this a semi urban myth or is it possible where both parties are satisfied with arrangement and of course the Buyer has the money to pay up as cash.

Don't think you'll get away with the stamp duty thing but just wanted to say - 'Welshcakes - mmmmmmmmm, lovely.' My Nan from Penlan used to make the best ones ever.

Andy_L

h4nym wrote:

Remember when VAT was put up from 15% to pay for a £100 cut in everyone's poll tax?

I though Lamont increased it to make up for the high level of defaulting in poll tax.