Shared Ownership & Calculating Stamp Duty

MrArmz

Hello,

I'm currently in the process of 'staircasing' up to 100% of my property, and I'm struggling to calculate how much stamp duty I will need to pay.

I first purchased a 30% share of the property. The property was worth £215,000 at the time, so I bought £64,500 worth of shares, and didn't have to pay any stamp duty at the time.

I am now buying the remaining 70%. The property is now worth £350,000, so the shares I'm buying are at a cost of £245,000.

I've read the various pages on the gov.uk website about this topic, as well as the little information that's available on other websites, but the maths to working this out still eludes me, and I'm hoping one of you clever people will be able to help me out.

MrArmz

My solicitor has told me that I will have to pay £4,334 stamp duty. Is this correct?? I thought it would have been less than that...

Any advice would be much appreciated!

SmlSave

Have a read and see which applies to you


https://www.gov.uk/stamp-duty-land-tax/shared-ownership-property

booksurr

you are crossing the 80% threshold (and thus triggering an SDLT payment) in a single jump which is costing you 245,000

so in total you will have paid £309,500 (245+64.5)
SDLT on that is:
0% on first 125,000 = £0
2% on next 125,000 = £2,500
5% on remaining 309,500 - 125,000 - 125,000 = 59,500 x 5% = 2,975
total SDLT 5,475

however, because you only pay SDLT on the transaction(s) that take you over 80% and up to 100% ownership, the SDLT is apportioned to tax only the element(s) which relates to the transaction(s) above the threshold. Sadly in your case, you are making that jump in one single transaction all the way from 30% straight to 100%, so the size of the element of that jump is big (£245k)

The apportionment calculation is
5,475 x 245,000/309,500 = £4,334 net SDLT payable

example 2 is the relevant one:
https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-and-buying-further-shares

rtho782

Buy enough to take yourself to 79%, then buy the rest later.

MrArmz

Thank you booksurr so much for the clear explanation and break down of how it was all calculated. You have been really helpful.