stamp duty. any legitimate ways to avoid it?

grey_gym_sock

the original question - is there a legit way to avoid it - was fine. and was answered in post #2.

he/she is being slagged off for then whinging about it. there is a difference between discussing how the tax system could be made fairer and whinging about how much tax one has to pay. though even the former is slightly off-topic is the "cutting tax" sub-forum.

Savvy_Sue

zygurat789 wrote: »

Don't move house seems a popular way at the moment.

:rotfl:

Daniel_Elkington wrote: »

Chattels (UK) Moveables (Scotland) are not part of the cost, so if you have a house worth 500K you could offer £480 for it and another £20K for chattels (light bulbs, free-standing ovens etc.) Anything that is not actually part of the property can be classed as a chattel.

I did wonder about adding this as an option to my answer in post 2 (!) but I thought the OP was probably aware of this option, AND there are limits.

I don't know where the different thresholds are exactly atm, but if it's nothing below £100,000 and an increased rate above £250,000, the OP might think it was 'legitimate' to offer £100,000 for a property worth £250,000 and £150,000 for the chattels. HMRC would disagree with this, and I believe that both amounts are listed on the deed of sale - even when we bought our first house the solicitor explained that we couldn't pay 'over the odds' for the carpets etc in the hope of reducing our Stamp Duty.

John_Pierpoint

Find a cheap site and build your own mansion ?
How about a bit of "Bungalow gobbling" - though that presumably won't qualify for a VAT refund.

OK this is not meant to to be a philosophical debating section of the forum BUT:
Stamp duty is a really old tax - it pre-dates the "temporary" income tax imposed to defeat France. Its main benefit is that it was simple to collect and police, when it was a flat rate. [That said I know of a property that, according to a free copy-of-the- Land-Registry-figures web site, has sold for £50k less than I "know" it went for - c0ck-up or conspiracy?]
http://www.hmrc.gov.uk/history/

Stamp duty is a good example of "fiscal drag" achieving a result that is exactly what our "bankrupt" government does not want. There is a huge fuss at the moment about the children of the internet age being unable to buy a home and it is "so unfair". I wonder how many wealthy "baby-boomers", rattling about in a family home and dreaming of a luxury sea side apartment, then look at the tax take of what they want to do and decide to stay put?

The government is already intending to "tax" social housing tenants in this situation - how long before they dream up an empty bedroom tax for owner occupiers? Perhaps we have one already, called council tax ?

zzzLazyDaisy

Daniel_Elkington wrote: »

Chattels (UK) Moveables (Scotland) are not part of the cost, so if you have a house worth 500K you could offer £480 for it and another £20K for chattels (light bulbs, free-standing ovens etc.) Anything that is not actually part of the property can be classed as a chattel. .

Small problem with this - HMRC are onto it, and have been for a very long time.

In assessing the value of the chattels you are only allowed to use their second-hand value (which in many cases will be peanuts) and you have to produce the receipts for the original cost (which many sellers will no longer have). Your solicitor has to declare the sum spent on chattels to the HMRC and submit this information.

Chattels must be declared on the contract form in England (I can't speak for Scotland). 'Doing a deal' with the seller whereby you declare one figure to the solicitors, land registry, and HMRC, and privately give a cash incentive to the seller is fraud.

Any purchase close to the STD band is much more likely to attract investigation from HMRC, and it is not in the interests of the professionals involved to flout the law.

Savvy_Sue

zzzLazyDaisy wrote: »

In assessing the value of the chattels you are only allowed to use their second-hand value (which in many cases will be peanuts) and you have to produce the receipts for the original cost (which many sellers will no longer have).

I don't remember the seller (or even us) producing receipts on the few occasions when we've moved. I know we did pay a notional sum for carpets and curtains in at least one of our moves. Is the requirement to produce receipts a new-ish thing? Haven't moved for a while ...

zzzLazyDaisy

Savvy_Sue wrote: »

I don't remember the seller (or even us) producing receipts on the few occasions when we've moved. I know we did pay a notional sum for carpets and curtains in at least one of our moves. Is the requirement to produce receipts a new-ish thing? Haven't moved for a while ...

I think it came in about 6 years ago (from memory), but as far as I know, it is only really relevant where you have a purchase price close to the upper limit of the current SD band, and a figure for chattels which, when added to the purchase price, takes you into the next band.

So my response was directed at the suggestion above, that you could take a purchase price of £500k, pay only £480k, and then pay £20k for the chattels, in order to avoid paying full stamp duty. There was a time in the past when this was a legitimate and commonly used loop-hole, but HMRC are now much more vigilant.

racing_blue

If a buyer acquires a business which has a residential property among its assets, is SDLT payable? The ownership of the property need not change- it remains with the business.

Apologies if I am straying into the badlands with this- I don't know the answer, or the law, and on reflection it sounds to me like the sort of arrangement that could be challenged by HMRC.

I only mention it as have been involved in the purchase and sale of a business which owned two commercial properties. If I recall correctly, SDLT was not payable, although the legal team had to look carefully into it.

Savvy_Sue

zzzLazyDaisy wrote: »

I think it came in about 6 years ago (from memory), but as far as I know, it is only really relevant where you have a purchase price close to the upper limit of the current SD band, and a figure for chattels which, when added to the purchase price, takes you into the next band.

So my response was directed at the suggestion above, that you could take a purchase price of £500k, pay only £480k, and then pay £20k for the chattels, in order to avoid paying full stamp duty. There was a time in the past when this was a legitimate and commonly used loop-hole, but HMRC are now much more vigilant.

Ah, that's going to put whoever buys from us at a disadvantage if they want to make us an offer for the chattels. Carpets and curtains were here when we moved in, and I'm not likely to either replace any or want to take them with us!