Shared Ownership Stamp Duty

Mithra

Hi All,
I know similar questions have been asked many times, but I haven't found anything which answers my current situation yet so was hoping someone could give me some advice, apologies if it's elsewhere.

I purchased a 50% share in a shared ownership property valued at £500,000 a few years ago, and am now looking at staircasing for the rest. So far as I've read, you only pay stamp duty on transactions which take you over 80% ownership and any after that.

I had assumed that meant If I staircase to 80%, then to 100% I would pay only a further 0.2*(stamp duty for £500000 purchase) (assuming the value stayed constant). However I've read a couple of places which seem to suggest all transactions (other than the initial purchase) are linked, so I'd have to pay the full stamp duty in the end anyway, just would only pay once I go over 80%?

Would someone be able to advise on which is correct please? Makes quite a difference to how much stamp duty we have to pay!

Thanks

booksurr

did you, or did you not, make a market value election when you purchased your initial 50% share?

if you did then there is no further SDLT to pay when you staircase
if you did not, and therefore using your figures your purchase cost ("premium") must have been 250k for your 50% share so let us assume it was when the SDLT rate was 1% up to 250K meaning you would have paid SDLT of £1,250

if you don't believe what you have read then only read the .gov.uk website as that is the correct info....
https://www.gov.uk/guidance/sdlt-shared-ownership-property

if you staircase now to 80% you will pay nothing

if you then go over 80% in a further transaction you will pay SDLT on the value of that extra transaction (or transactions if more than one is required to get you to 100%) and the bit you seem to have been confused by is that calculation is apportioned so although the maths is based on the full 500k, the apportionment results in the amount of extra SDLT you pay at that time is related only to the final 20% you are buying

see this
https://forums.moneysavingexpert.com/discussion/5395860

have you read the guide? The examples are pretty straightforward

Mithra

I didn't make a market value election no, should have mentioned that, so you are correct I only paid on the £250k.

I've read through the .gov.uk website which was what made me think it was only the transactions over the 80% which were taxed. It was actually the calculator on shareamortgage (dot) com/staircasing-stamp-duty-calculator, as it seems to suggest I'd end up paying tax on the whole thing anyway.

Thanks for the confirmation though, guess we'll go with just going to 80% for now since it seems that ends in the stamp duty being much less in total! (Even considering the doubled up legal fees)

booksurr

yes i can see why you are confused. I too cannot make sense of that calculator but I know for sure that my manual calculations as shown in the thread i linked to above are correct

do bear in mind that whilst 2 lots of legal fees is a very valid factor to consider, you are taking a massive gamble over the property value when you decide to staircase in additional steps. Your assumption in your OP that the value remains constant at 500k is of course nonsense. What you should do is to play with some values to see where the break point is on your options:

option1 go to 80% then go to 100%
how much does the value have to change by the time you do the 100% step before the extra SDLT (+ 2 or more legal fees) on the increased valuation far outweights the amount saved on the up to 80% steps

option 2 go from 50% to 100% in one step
obviously one set of legal fees, and a SDLT calculation based on a known value with no unknown future rises to consider?

your choice, do the maths and take a gamble on house price inflation!