First Time Buyer paying SDLT (Market Value Election vs Payment in Stages)

SDLT_Geek

Jose_Ferraro wrote: »

Sorry SDLT Geek but how did you work out the sum of £333 to add to the apportioned SDLT of £3,833? Is it £3,833 - £3,500 = £333?

Yes. Thanks 00ec25 too.

Jose_Ferraro

Hopefully this example of stair casing illustrates the correct working out for SDLT. SDLT Geek and 00ec25 any corrections would be welcome. Many thanks.

Transaction 1
Market value: £412,500
Purchase of 30% = £123,750
30% share total
SDLT: £0 due to FTB relief / payment in stages election

Transaction 2
Market value: £550,000
Purchase of 30% = £165,000
60% share total
SDLT: £0 due to 80% threshold / payment in stages election

Transaction 3
Market value: £600,000
Purchase of 25% = £150,000
85% share total triggering SDLT
0% on £125,000
2% on £125,000 = £2,500,
5% on £350,000 = £17,500
Total: £20,000
Apportioned: 150:600 (0.25 x £20,000) = £5,000

Transaction 4
Market value: £670,000
Purchase of 15% = £100,500
100% share total
0% on £125,000
2% on £125,000 = £2,500,
5% on £420,000 = £21,000
Apportioned: 100.5:670 (0.15 x £23,500) = £3,525

- Transaction 3 linked forwards to transaction 4:
£150,000 (cost of 30% of transaction 3) / £670,000 (total consideration at transaction 4) = 0.22
0.22 x £23,500 (SDLT on £670,000) = £5,170
£5,170 (SDLT due on transaction 3) - £5,000 (SDLT paid on transaction 3) = £170 extra to pay

SDLT due on transaction 3: £5,000
SDLT due on transaction 4: £3,525 + £170.00 = £3,695
Total SDLT for 100% share = (£5,000 + £3,695) £8,695

SDLT_Geek

Jose_Ferraro wrote: »

Hopefully this example of stair casing illustrates the correct working out for SDLT. SDLT Geek and 00ec25 any corrections would be welcome. Notes interspersed below and my calculation beneath laid out in the same way Many thanks.

Transaction 1
Market value: £412,500
Purchase of 30% = £123,750
30% share total
SDLT: £0 due to FTB relief / payment in stages election / under the £125,000 threshold, but a return is needed as over £40,000

Transaction 2
Market value: £550,000
Purchase of 30% = £165,000
60% share total
SDLT: £0 due to 80% threshold / payment in stages election
Correct

Transaction 3
Market value: £600,000
Purchase of 25% = £150,000
85% share total triggering SDLT
0% on £125,000
2% on £125,000 = £2,500,
5% on £350,000 = £17,500
Total: £20,000
Apportioned: 150:600 (0.25 x £20,000) = £5,000
No, you have calculated the notional gross SDLT on the market value, it should be calculated on the running total of payments made.

Transaction 4
Market value: £670,000
Purchase of 15% = £100,500
100% share total
0% on £125,000
2% on £125,000 = £2,500,
5% on £420,000 = £21,000
Apportioned: 100.5:670 (0.15 x £23,500) = £3,525
No, as above the calculation is on payments, not market value

- Transaction 3 linked forwards to transaction 4:
£150,000 (cost of 30% at transaction 3) / £670,000 (total consideration at transaction 4) = 0.22
0.22 x £23,500 (SDLT on £670,000) = £5,170
£5,170 (SDLT due on transaction 3) - £5,000 (SDLT paid on transaction 3) = £170 extra to pay
Right idea, wrong figures as market value has led you astray.

SDLT due on transaction 3: £5,000
SDLT due on transaction 4: £3,525 + £170.00 = £3,695
Total SDLT for 100% share = (£5,000 + £3,695) £8,695
I come out with less calculating on the basis of payments made.

Transaction 1
Market value: £412,500
Purchase of 30% = £123,750
Running total of payments = £123,750
30% share total
SDLT: £0 as under the threshold

Transaction 2
Market value: £550,000
Purchase of 30% = £165,000

Running total of payments = £288,750
60% share total
SDLT £0 due to 80% threshold / payment in stages election

Transaction 3
Market value: £600,000
Purchase of 25% = £150,000

Running total of payments = £438,750
85% share total triggering SDLT
0% on £125,000
2% on £125,000 = £2,500,
5% on £188,750 = £9,437
Total: £11,937
Apportioned: 150,000/438,750 x 11,937 = £4,081

Transaction 4
Market value: £670,000
Purchase of 15% = £100,500

Running total of payments = £539,250
100% share total
0% on £125,000
2% on £125,000 = £2,500,
5% on £289,250 = £14,462
Total:£16,962
Apportioned: 100,500/539,250 x £16,962 = £3,161

- Transaction 3 linked forwards to transaction 4:
£150,000 (cost of 30% of transaction 3) / £539,250 (total consideration paid by end of transaction 4)
x £16,962 (SDLT on £539,250) = £4,718
£4,718 (SDLT due on transaction 3) - £4,081 (SDLT paid on transaction 3) = £637 extra to pay

SDLT due on transaction 3 at the time: £4,081
SDLT due at the time of transaction 4: £3,161 + £637 = £3,798
Total SDLT for 100% share = (£4,081 + £3,798) £7,879

The Geek was in London this week talking to the combined Stamp Taxes teams at HMRC. SDLT on staircasing was raised as one of the most complex and least well explained areas. HMRC guidance needs to be much better!