Stamp duty and staircasing

Sandyra

Hi

I’m planning to staircase too 100%. I’ve already staircases to 75% so never had to pay the stamp duty before as I opted to pay the stamp duty in stages. I’ve looked at the gov.uk examples to calculate what I would pay but I wanted to check if anyone is clear about the additional tax calculation. I just want to make sure I have enough savings to cover the stamp duty. I was planning to ring HMRC but hoping someone can shed some light.

July 2015 I bought 35% share of £277,500 property. (£97,125) June 2016 I staircased and bought an additional 40%, this time it was valued at £315,000. (£125,00) The property has been valued at £315,000 and I want to buy the last 25%. (£78,750) When I bought my first share I do remember paying £147 which is on my completion statement which I guess is paying the tax on the lease premium.

So here goes...

Transaction 1
No tax to pay as £97,125 was below the threshold. £147 paid.

Transaction 2
Consideration of £223,125
0% on £125,000
2% on £98,175 (£223,125 - £125,00)
= £1963.50
Apportioned (126:223)
= £1,108.80

Transaction 2
Consideration of £301,875
0% on £125,000
2% on £125,000
5% on £51,875 (£301,875 - £250,000)
= £5,093.75
Apportioned (78:301)
= £1,328.80

Tax due on transaction 2 = 126/301 x 5093.75 = £2,126.08; £2,126.08 - £1,108.80 = £1,017 extra to pay

Tax on transaction 3? Is it nothing because the value is still the same?

Total tax = £1,108.80 + £1,328.80 + £1,017
= £3,454.60

Any help greatly appreciated x

SDLT_Geek

I make the SDLT due £1,329.

I add up the sums you have paid:
97,125 when you took the lease in 2015
126,000 payment (I take it you mean £126,000)
78,750

to give £301,875.

I work out SDLT on £301,875 at today's rates. I assume standard rates apply. I get £5,093.

I then take a proportion of this. The proportion is 78,750/301,875. That proportion of £5,093 gives me tax of £1,329 due on the transaction that takes you over 80%.

There is no SDLT on the earlier staircasing. There is no "top up" on the payment on the grant of the lease (due to later linked transactions). That is because the lease was granted after 12 March 2008.

So just the £1,329 is due.

I wonder if the £147 due on the grant of the lease was as a result of the assessment of the net present value of the rents. Is that right?

Sandyra

Thank you SDLT geek.

Yes sorry you are correct it is £126,000. I’m not 100% sure on the £147. The solicitor just told me to pay that if I was only opting to pay it in stages.

So you are saying that I don’t pay the SDLT on the share that took me to 75%. Just the part over the 80% threshold.

Thanks

00ec25

Sandyra wrote: »

So you are saying that I don’t pay the SDLT on the share that took me to 75%. Just the part over the 80% threshold.

correct

read the rules
https://www.gov.uk/guidance/sdlt-shared-ownership-property

Tom99

00ec25 wrote: »

read the rules
https://www.gov.uk/guidance/sdlt-shared-ownership-property

[FONT=Verdana, sans-serif]Those rules are not very well written. In the examples of staircasing they all assume the property have a current market value the same as when the 1st share was bought.[/FONT]
[FONT=Verdana, sans-serif]How the staircasing stamp duty is apportioned is particularly confusing.[/FONT]
[FONT=Verdana, sans-serif]In example 1 staircasing from 75% to 100% the stamp duty is apportioned 1:4 which makes you think it is the %age of the property you are now buying, 25%:100%.[/FONT]
[FONT=Verdana, sans-serif]But in example 2 they use the total price paid to date or market value, 15:300. You can't tell which as both figures are the same.[/FONT]

Sandyra

Hi

Back again. Queried this with my solicitor and they are stating an even larger amount £3,900 and not £1,329. I spoke to HMRC and the person on the line was very wishy washy but later confirmed was has been said here. What do I do? there’s a stark difference between the 2 and the solicitor is stating it makes no sense in not paying the other transactions as that would be getting part of the stamp duty tax off. I can pay it but is it going to be hard work getting the refund back? Or should I pay the lower amount and if it’s wrong pay the extra. Any advice would be greatly appreciated

00ec25

Sandyra wrote: »

the solicitor is stating it makes no sense in not paying the other transactions as that would be getting part of the stamp duty tax off

I take it the solicitor has limited experience of shared ownership?
Many previous examples on here where solicitors really don't understand the rules for SO. Have you told yours to read them?
Get them to ask on here if they don't understand what they are reading.

https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm27065

as has been explained, your liability is £1,329

almost worth a formal complaint through their complaints process as there really is no excuse for not checking the rules if they are inexperienced with SO. If they are experienced with SO then it certainly justifies a complaint.

00ec25

Tom99 wrote: »

Those rules are not very well written.

nonetheless they can be read and understood and are based on the Finance Act