SO Stamp Duty on Specified Rent?

cpheonix

Can anyone help please because I can't find anything on the HMRC website or anywhere on Google (unless I'm not looking hard enough!).

I've been told by my solicitors that I have to pay stamp duty on the specified rent of the SO property. Is this right?

Tixy

Have you seen this page on HMRC?

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm

I don't know if it answers your question from the limited info in your post as there are various options for stamp duty with shared ownership homes and it would depend what stage you are at (intitial purchase/ staircasing etc) and whether you have chosen or do choose a market value election.

That link does mention that high value rents NPV are taken in to account in some circumstances.

cpheonix

Thanks for the reply - sorry, it's a first purchase on a new build and I will be just paying the stamp duty for the % of my share.

I can't see in the link about it mentioned high value rent but not sure what equates to that in any case.

I was just unaware that there's this extra Stamp Duty bit on top of it (the rent part). I'm wondering if that's normal? Cheers

zzzLazyDaisy

You need to go back to your solicitor and ask for more detailed information.

Is this a HA SO? If so, you might try giving them a ring as they will have a lot of experience of SO purchases and should know if this is indeed the case.

All I can tell you from my own experience is that when my cousin bought a part share of a SO house, she did not pay any stamp duty because her share was under the stamp duty band, and she definitely did not pay any SD on the rental part.

Building_Surveyor

What is the market value of the house and value of your share?

cpheonix

The market value is £405,000 and I have a 40% share. It is a HA Shared Ownership.

So I know I have to pay the 1% on the equity part but my solicitor says I also have to pay this on the specified rent. Had no idea this was the case. They wouldn't be lying, would they?!

princeofpounds

This is very probably normal. Long-term rental contracts for sums that add up to a large amount are subject to stamp duty just like a purchase*.

This is to stop people disguising house sales as rental contracts in order to evade stamp duty.

* well, kind of - there are various rules as to how they should be compared, it's obviously not JUST like a purchase.

zzzLazyDaisy

Does this help - it explains how SD is calculated when you elect to pay only the SD due on the part share that you have purchased.

http://www.hmrc.gov.uk/sdlt/calculate/shared-ownership.htm

If you scroll down, you will see a link about situations where there is also a high annual rent to pay. I doubt that section would apply to HA S/O purchases, but if you read it you should be able to work out if it does in fact apply to you.

cpheonix

Great, thank you! I found something in that link that directed me to here: http://www.hmrc.gov.uk/sdlt/calculate/leasehold.htm#2

It's just annoying that on top of everything else another thing is added that you don't expect.