Stamp duty on share of freehold

jameswood

Hi all,

I am buying a UK share of freehold flat, structured as the acquisition of a 120 year lease, and a share in the freehold management company (a standard UK LTD that owns the freehold title). The offer value is £800,000.

My question:
- SDLT on leasehold property is 4%
- SD on share purchases is 0.5%
- Could I structure this purchase as, say, £700k for the share purchase, and £100k for the leasehold? This would appear to be more tax efficient.
- If not, which regulations prevent me from doing so, and please can someone link to them on the HMRC website? I have tried and not found anything relevant!

Thanks!

princeofpounds

You definitely can't mess with the fair market values, as the SDLT is charged on what they call the 'chargeable consideration', which is the 'value' of what you purchase, not the price you pay. Normally of course the two are the same.

http://www.hmrc.gov.uk/sdlt/calculate/value.htm

egoode

jameswood wrote: »

Hi all,
- If not, which regulations prevent me from doing so, and please can someone link to them on the HMRC website? I have tried and not found anything relevant!

I think you would find this would come under the General Anti-Abuse Rule. http://www.hmrc.gov.uk/avoidance/gaar.htm

Mattygroves2

You would also have to persuade the seller to accept the split you suggest which they wouldn't be happy to do as they would have to pay capital gains tax at (mostly) 28% on the profit he made on selling his share ! If they are a BTL investor then they may be able to offset the loss on the property value but if they are an owner occupier then they lose their PPR exemption from CGT.

However, as stated above you won't get your idea past your solicitor (who fills out the SDLT forms) as it is tax evasion.