Help with stamp duty

vickmart

Hello, this is my first posting so I hope I am doing it right. I need help with saving some money on stamp duty. I have been working at a local business for 20 years and the owners are now selling up. My husband and myself have decided to buy the business. The business is a B&B and holiday flats located in 2 buildings. We are not able to afford the whole business now so the owners have offered us the holiday flats house now at the price of £300,000 and we can lease the B&B from them. Hopefully the business will be successful allowing us to purchase the B&B in a few years time. Our problem is that we fall into the 3% stamp duty bracket which will be £9,000. Which has made our funds a bit tight. We have been advised to get a buy to let mortgage on this property which we are going ahead with. Would we be able to say that the business is worth £50,000 and the property is worth £250,000 allowing us to just pay the 1%. Or is this not the case with a buy to let property.

BobProperty

I think you are unlikely to avoid the 3% Stamp Duty. There may be mechanisms available to you and the seller but I can't see the argument that the business is worth £50k and the property £250k working as the business would have no value without the property.
Have you posted this on the Tax forum?

regularsaver1

I think you would still fall into the stamp duty category

Ian_W

I'm not sure the others are right that you may not be able to separate out Furnishings, Fittings and Good Will in an existing holiday rental business from the actual valuation of the property. I think you need to get advice about this from your lawyer, I'm certainly not saying, it can be done only that it might be possible if the figures do stack up. Being close to the threshold you need to be on firm ground as HMRC are likely to check all is above board and it isn't just a tax evasion scam.

I don't understand where you've got the advice on a BTL mortgage from - when I was looking at how to finance a holiday cottage 6 months ago BTL was a NO, NO. Every one I looked at required you to let on a shorthold assured tenancy basis, i.e. min 6 months+ tenancy for each let. Holiday letting clearly isn't that and if you say you intend to let on that basis when you don't, simply to obtain the mortgage, it's potentially not only a breach of contract but also mortgage fraud. Obviously products may have changed since then but be careful with this suggestion if they haven't.

BTW best of luck with the business - hope it works out for you.

vickmart

Thanks alot for everyones advice, its all been very helpful.