LBTT (stamp duty & ADS in Scotland

JonMitchell

Nikster73 said:

I'm still unsure what now applies to us?  
Do we still pay the full LBTT (stamp duty) amount? and £11k additional dwelling? 

What is the final price of the property you are buying if I may ask?
If purchase price is £287500 then, based on your £11.5K ADS figure
The first £250K - you do not pay SDLT for the first £250K
From £250K - £287500 - £37500 will incur SDLT
But you will have to pay 4% for Additional Dwelling Supplement for £287500 - £11.5K
I have a property in Scotland which completed in March, 4days before lockdown, that I paid the full monty of the tax, ouch!
I am no expert but have 2 suggestions for you:
a.) Chat to your solicitor and negotiate for the Date of Entry (Completion date) to be delayed few days after 17th July, as I remembered funds need to be cleared a day before Date of Entry in my recent purchase with the seller solicitor. This means you save some SDLT of the first £250K
b.) Consider whether it would be viable to keep your existing flat, for rental, or to sell it. If your rental for a year exceed the £11.5K+ stamp duty and you plan to continue to rent it on long term basis, when you sell you current flat in say 10years time, you can offset the £11.5K+ as a loss to be deducted from the Capital Gain Tax computation. If you do decided to sell the flat now instead of renting, you then can claim the £11.5K back from HMRC.
Hope helpful

Nikster73

David, am I correct in saying that we will no be required to pay the full LBTT (stamp duty amount)  but we will still be required to pay the full ads amount?
How will I know the amount we have to pay? 

davidmcn

Nikster73 said:

David, am I correct in saying that we will no be required to pay the full LBTT (stamp duty amount)  but we will still be required to pay the full ads amount?
How will I know the amount we have to pay?

It's calculated as JonMitchell says.

Assuming your price is £275k, you pay the "normal" rate, which is now 0% up to £250k and then 5% for the portion above £250k (£25k x 5% = £1250)

plus 4% ADS on the whole price, as before (£275000 x 4% = £11000).

So total £1250 + £11000 = £12250

Nikster73

The purchase price is £280,995
LBTT (stamp duty is) £3,649
ADS is £11,239

davidmcn

Nikster73 said:

The purchase price is £280,995
LBTT (stamp duty is) £3,649
ADS is £11,239

Ok, so calculated with the same principles i.e. ADS hasn't changed but you save a bit on the standard portion of LBTT.

Nikster73

The only issue we might face now is that the builder were paying the £3,649 LBTT as an incentive.  Will they now give us the remaining £2149 and we can use this towards the ADS?  This would bring the AdS amount to £9090.  My husband thinks they will only pay the £1500 LBTT and give us nothing else  not sure if there is anything we can do about it?  

Nikster73

Jon
I have sent you a private message.

davidmcn

Nikster73 said:

The only issue we might face now is that the builder were paying the £3,649 LBTT as an incentive.  Will they now give us the remaining £2149 and we can use this towards the ADS?  This would bring the AdS amount to £9090.  My husband thinks they will only pay the £1500 LBTT and give us nothing else  not sure if there is anything we can do about it?  

Have you concluded missives, and if so what do they say about the incentive?

Nikster73

Will need to check our missives 

JonMitchell

Nikster73 said:

Will need to check our missives 

Missive is usually a standard short legal binding contract statement, they don't usually say anything about incentive. Best ask your solicitor asap - are they based locally from you? They should and must know, if not get them to ask seller's legal.