Stamp Duty Land Tax payable up to 30 days after completion?

fuzzb

Hi,

We're currently late in the process of buying a property and are waiting to exchange contracts, and have come up against a situation that we hadn't anticipated with regards to paying Stamp Duty.

We were under the assumption that we'd be able to defer completing the Stamp Duty return and paying the amount owed until 30 days after the completion date. The reason for wanting to do this is that we've only been able to secure an 85% mortgage, and we don't have enough readily available funds to pay 18% of the total price on the completion date, however we will be able to get the 3% required for SDLT by the end of the 30 day period following completion.

Our conveyancer says that this is not possible and that they will need us to transfer 10% by exchange date and the remaining 5% deposit and 3% SDLT by completion date.

I've come across some contradicting information by the CML and HMRC, and I was wondering if anyone knows for sure if you're able to defer paying SDLT until 30 days after completion?

The CML says:

10.4 You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all stamp duty land tax and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself.

HMRC says:

The deadline for filing your return is 30 days after the effective date of the transaction. The effective date of the transaction is usually the completion date.
If you have to pay Stamp Duty Land Tax on the transaction, the payment deadline is the same as for the return. You must pay within 30 days of the effective date.

Thanks in advance for any info.

kingstreet

Your solicitor won't complete without all the monies in place - mortgage, deposit, stamp duty and their fees. The solicitor acts for the lender as well as for you, so he/she abides by the CML code.

G_M

Who are CML?

The legal requirement for HMRC is to pay within 30 days. So if you were paying for the property yourself in cash (no mortgage) and doing the conveyancing yourself, that is the time you would have.

Most solicitors prefer to have ALL the funds before Completion, so they know they can pay everyone (including themselves!).

And mortgage lenders probobly insist on this before lending, so they know the SDLT will be paid.

Aberdeenangarse

If it's only 30 days, extend your Completion by that......simples:money:

kingstreet

G_M wrote: »

Who are CML?

The legal requirement for HMRC is to pay within 30 days. So if you were paying for the property yourself in cash (no mortgage) and doing the conveyancing yourself, that is the time you would have.

Most solicitors prefer to have ALL the funds before Completion, so they know they can pay everyone (including themselves!).

And mortgage lenders probobly insist on this before lending, so they know the SDLT will be paid.

The CML (Council of Mortgage Lenders) Handbook is the instruction/procedures manual mortgage lenders insist solicitors follow to be allowed onto lender panels to represent both borrower and lender. AFAIK only HSBC of the major lenders doesn't follow the CML Handbook.

Hopefully Richard or timmyt can tell us more, as it's a bit off my beaten track you might say.

Yorkie1

The CML says:

10.4 You are only authorised to release the loan when you hold sufficient funds to complete the purchase of the property and pay all stamp duty land tax and registration fees to perfect the security as a first legal mortgage or, if you do not have them, you accept responsibility to pay them yourself.

HMRC says:

The deadline for filing your return is 30 days after the effective date of the transaction. The effective date of the transaction is usually the completion date.
If you have to pay Stamp Duty Land Tax on the transaction, the payment deadline is the same as for the return. You must pay within 30 days of the effective date.

The solicitor receives the mortgage funds from the lender but is only authorised to release them if all other funds are already received. The only time when the mortgage funds can be released without the solicitor having received the money to pay everything else, is if the solicitor guarantees to pay any missing costs.

Therefore, if the solicitor agreed to complete the sale without receiving the stamp duty money from OP, then the solicitor is personally liable to pay the stamp duty if for any reason the OP doesn't come up with the goods. I can't imagine any solicitor agreeing to that.

The HMRC quote is completely unrelated. It just means that there is a period of time for the paperwork to be completed without the OP being penalised for late registration.

fuzzb

Ok thanks everyone, that seems pretty conclusive!

How wrong is it that SDLT is charged at 3% of the whole amount, not simply 250k+. Makes me mad, grrrrrr!

Richard_Webster

The solicitor receives the mortgage funds from the lender but is only authorised to release them if all other funds are already received. The only time when the mortgage funds can be released without the solicitor having received the money to pay everything else, is if the solicitor guarantees to pay any missing costs.

Therefore, if the solicitor agreed to complete the sale without receiving the stamp duty money from OP, then the solicitor is personally liable to pay the stamp duty if for any reason the OP doesn't come up with the goods. I can't imagine any solicitor agreeing to that.

The HMRC quote is completely unrelated. It just means that there is a period of time for the paperwork to be completed without the OP being penalised for late registration.

I agree with this.

If OP wasn't getting a mortgage then it would be up to him.

LandyAndy

fuzzb wrote: »

Ok thanks everyone, that seems pretty conclusive!

How wrong is it that SDLT is charged at 3% of the whole amount, not simply 250k+. Makes me mad, grrrrrr!

It's 'wrong' in the sense that it distorts the housing market around the break points. However, if the rates were reformed the goverment would set the percentages (and break points) to attempt to maintain its total income from SDLT and the inequity in what is paid for different values of property would simply be shuffled around to different areas of the market.

Jeffrey_Shaw

Richard and Timmy are both right. The SDLT is payable to HMRC within 30 days of completion.
But that's so only between you and HMRC. The CML requirements bind your solicitor in any event.