Shared Ownership: Stamp Duty Mind Melt!

AdrianC

ajk1 wrote: »

I do not recall 'opting' to pay any SDLT in 2010.
I only remember paying a deposit, solicitor fee and a survey fee.
The lease is a 50-page paper document (non-electronic) but I am making my way through it for any comments related to SDLT/Stamp Duty/Tax

The lease will not mention SDLT, because it's not a lease-specific thing.

It's a legal requirement.

But... if you were an FTB in 2010, you may have been eligible for 0% SDLT. The incentives available changed during 2010...
https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax/stamp-duty-land-tax-rates-1-january-2010-to-24-march-2010
https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax/stamp-duty-land-tax-rates-25-march-2010-to-5-april-2011

So if you paid <£125k, it was 0%.
If you were an FTB and paid <£250k after 25/3/10, it was 0%.

SDLT_Geek

AdrianC wrote: »

The lease will not mention SDLT, because it's not a lease-specific thing.

Whilst leases generally do not mention SDLT, shared ownership leases are often an exception, with most shared ownership leases closely following model forms, which do contain a provision about the SDLT election.

ajk1

Greetings all,
Just a courtesy note: I havent got round to checking the lease yet as we haven't received an offer yet, but I'll be sure to post an update when I get there

Seymor

Hi SDLT Geek,

Based on this:

So if you staircase paying £411,000 you will have paid £575,000 in total. SDLT on £575,000 at today's rates would be £18,750. You pay a fraction of that. The fraction is £411,000 / £575,000. That gives SDLT due of £13,402 if you staircase out.

To minimise the SDLT you will pay, would it be better to staircase in two jumps, from say 35% to 75%, then 75% to 100%; rather than jumping from 35% directly to 100%? Thus reducing the fraction.

Many thanks for your advice!

00ec25

Seymor wrote: »

Hi SDLT Geek,

Based on this:



To minimise the SDLT you will pay, would it be better to staircase in two jumps, from say 35% to 75%, then 75% to 100%; rather than jumping from 35% directly to 100%? Thus reducing the fraction.

Many thanks for your advice!

yes, as clearly explained in the rules previously given in the link, you pay SDLT in the transaction that takes you to, or over, 80% (and any subsequent ones that take you up to 100%). You do not pay SDLT on transactions up to 80%

dofi

SDLT_Geek wrote: »

The first step is for you to look at the 2007 lease taken by your predecessor. It is possible that it contains a clause stating that the lessee elected in 2007 to pay the SDLT in one go on the market value of the property at the time. If that election was made then SDLT has been paid which covers future staircasing. Even though it is you as a successor who staircases to over 80%, there is no further SDLT due from you.

Thanks so very much for this. I've been looking for this answer for weeks, even called HMRC to no avail. The solicitor had no clue - told me I needed the receipt or a letter from HMRC confirming. (I'll be finding a new one tomorrow.) But I recall it being in the lease, which I'll have to dig out now (thought I was losing my mind and the original solicitor wouldn't confirm telling me this.)

I'm in a partially similar position to OP except I wanted to sell at 100% or I would lose my "owner improvements and effectively gift the housing association nearly £30k. So glad to confirm no stamp duty will be due. Yippee! :j (So grateful!)

I can see a lot of people have been looking for this information. I suppose it's a rare situation, but how is this not more widely known? Is there any libraries you can refer me to, in case I need to educate my new solicitor, rather than having to fork over a few grand in stamp duty while they work it out?

:beer:

dofi

SDLT_Geek wrote: »

The sum of £10,550 has been worked out on a straight £411,000 without linking it to any other transaction. The staircasing you undertake is a transaction with the social landlord and you have no previous acquisition from the social landlord. Your 2010 acquisition was from your predecessor lessee: a person who is not a "connected person" with the social landlord. As your acquisitions are from two unconnected persons, they cannot be linked..

Also good to know. Have you written, or could you write, a guide to take of shared ownership properties? These answers are too difficult to find, given the popularity of shared ownership properties.:

SDLT_Geek

dofi wrote: »

Also good to know. Have you written, or could you write, a guide to take of shared ownership properties? These answers are too difficult to find, given the popularity of shared ownership properties.:

I do have it in mind to write a guide on SDLT on Shared Ownership Properties, but have not got very far with it yet.

Seymor

yes, as clearly explained in the rules previously given in the link, you pay SDLT in the transaction that takes you to, or over, 80% (and any subsequent ones that take you up to 100%). You do not pay SDLT on transactions up to 80%

Many thanks for confirming this for me.

Seymor

Hello all, me again, hoping you can help. I've read the information above and in the examples on the Government website but am still finding it all confusing. I've approached a conveyancer who specialises in staircasing and they've said my stamp duty would be £3,127 if I staircase from 35% to 100%, but haven't said how they got to that figure.

I currently own a 35% share of a property that was £260,000 when purchased in Jan 2011 and am looking to staircase to 100%. The flat is now valued at £500,000. However from what I understand in replies above I might pay less SDLT if I do that in two steps rather than one, as the tax just applies to the transaction that goes over 80% ownership. Just to confirm I deferred payment of stamp duty when I bought the flat.

So I work out the two scenarios as follows:

1) Staircasing to 100% in one go

In 2011 I initially paid £91,000 for a 35% share.

In 2020, I’m planning to pay £325,000 for a 65% share to take it to 100%

That totals £416,000. SDLT on an acquisition of a residential property at standard current rates for £416,000 would be:

(calculated at slice rates)

0% on first £125,000 = £0

2% on £125,000–£250,000 = £2,500

5% on remainder £166,000 = £8,300

TOTAL: £10,800

SDLT would be £7,020 apportioned 325:500

2) Staircasing to 75% then from 75% to 100%

In 2011 I initially paid £91,000 for a 35% share.

In 2020, I pay £200,000 for a 40% share to take it to 75%

In 2020, I pay £125,000 for a 25% share to take it to 100%

That totals £416,000. SDLT on an acquisition of a residential property at standard current rates for £416,000 would use the same slice calculations as the first scenario with a total £10,800, but SDLT would be £2,700 apportioned 125:500.

Have I calculated this correctly? 
On the government website, there's also mention of money owed on the first lease premium (example 1)?: 

Additional tax calculation

Tax on the £80,000 lease premium is due at the time of the third transaction. This is because the transactions are linked for SDLT. The total consideration for all the linked transactions is now more than the 0% SDLT threshold. This tax is calculated under the rules which applied at the date the lease was granted, so the tax due is 1% of £80,000 = £800.

I don't know if this applies to my scenario, and if so, what I would owe?
Many thanks for your help!