Shared Ownership SDLT

Pipz

Hi all,

I just wanted to check my figures / understanding of the above for my case.

Feb 2013 - obtained 50% of property valued at £200K for £100K, no stamp duty to pay at that time (I did not opt for market value election)

Jun 2022 - obtaining the remaining 50% of the property now valued at £310K for £155K, my calculation:

SDLT due - £2750 (£125K at 0%, £125K at 2% (£2500), £5K at 5% (£250)

£2750 apportioned 155/255 = £1671.57 (value I believe is to pay).

Source - https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-and-buying-further-shares

I'm not sure whether or not "Additional Tax" referenced in the above actually applies.

My solicitors calculations seem to vary from the above, if they get it wrong, does it all come out in the wash with HMRC at a later date, or would any correction from them come with fines?

hackneylou

I would ask your solicitor to explain how they reached their calculations. 

They do occasionally make mistakes (ours did) but equally it could be something they haven't made clear.  

SDLT_Geek

Pipz said:

Hi all,

I just wanted to check my figures / understanding of the above for my case.

Feb 2013 - obtained 50% of property valued at £200K for £100K, no stamp duty to pay at that time (I did not opt for market value election)

Jun 2022 - obtaining the remaining 50% of the property now valued at £310K for £155K, my calculation:

SDLT due - £2750 (£125K at 0%, £125K at 2% (£2500), £5K at 5% (£250)

£2750 apportioned 155/255 = £1671.57 (value I believe is to pay).

Source - https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-and-buying-further-shares

I'm not sure whether or not "Additional Tax" referenced in the above actually applies.

My solicitors calculations seem to vary from the above, if they get it wrong, does it all come out in the wash with HMRC at a later date, or would any correction from them come with fines?

I agree with your calculation of SDLT on the staircasing transaction of £1,671, using the method you set out, assuming:

(a)  The property is in England
(b)  You do not now have other property interests
(c)  You are keeping the property (there is no back to back sale of the property)
(d)  When you bought in Feb 2013 you bought from the social landlord (not from someone who had previously bought from a social landlord.

The "Additional Tax" referred to on the website is extra tax on the first transaction (in your case the Feb 2013 purchase) as a result of the later staircasing over 80%.  But that only applies if the original purchase was before 12 March 2008, so that does not apply in your case.

Pipz

SDLT_Geek said:

Pipz said:

Hi all,

I just wanted to check my figures / understanding of the above for my case.

Feb 2013 - obtained 50% of property valued at £200K for £100K, no stamp duty to pay at that time (I did not opt for market value election)

Jun 2022 - obtaining the remaining 50% of the property now valued at £310K for £155K, my calculation:

SDLT due - £2750 (£125K at 0%, £125K at 2% (£2500), £5K at 5% (£250)

£2750 apportioned 155/255 = £1671.57 (value I believe is to pay).

Source - https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-and-buying-further-shares

I'm not sure whether or not "Additional Tax" referenced in the above actually applies.

My solicitors calculations seem to vary from the above, if they get it wrong, does it all come out in the wash with HMRC at a later date, or would any correction from them come with fines?

I agree with your calculation of SDLT on the staircasing transaction of £1,671, using the method you set out, assuming:

(a)  The property is in England
(b)  You do not now have other property interests
(c)  You are keeping the property (there is no back to back sale of the property)
(d)  When you bought in Feb 2013 you bought from the social landlord (not from someone who had previously bought from a social landlord.

The "Additional Tax" referred to on the website is extra tax on the first transaction (in your case the Feb 2013 purchase) as a result of the later staircasing over 80%.  But that only applies if the original purchase was before 12 March 2008, so that does not apply in your case.

Assumptions 'a' to 'c' are corrrect, regarding 'd':

I bought the property as a re-sale in 2013, obtaining the 40% share that the first owner of the property had acquired from the Housing Association and an additional 10% directly from the Housing Association (in effect a staircasing transaction) to take my share of the property to 50%

Pipz

hackneylou said:

I would ask your solicitor to explain how they reached their calculations. 

They do occasionally make mistakes (ours did) but equally it could be something they haven't made clear.  

Their formal figure will reach me in the coming week but the amount the quoted over the phone was different from the above (and sounded slightly out to me hence me floating my calculation for a sense check). I'll ask for their workings once I've had the completion statement through, if there is variation.

SDLT_Geek

Pipz said:

SDLT_Geek said:

Pipz said:

Hi all,

I just wanted to check my figures / understanding of the above for my case.

Feb 2013 - obtained 50% of property valued at £200K for £100K, no stamp duty to pay at that time (I did not opt for market value election)

Jun 2022 - obtaining the remaining 50% of the property now valued at £310K for £155K, my calculation:

SDLT due - £2750 (£125K at 0%, £125K at 2% (£2500), £5K at 5% (£250)

£2750 apportioned 155/255 = £1671.57 (value I believe is to pay).

Source - https://www.gov.uk/guidance/sdlt-shared-ownership-property#paying-sdlt-in-stages-and-buying-further-shares

I'm not sure whether or not "Additional Tax" referenced in the above actually applies.

My solicitors calculations seem to vary from the above, if they get it wrong, does it all come out in the wash with HMRC at a later date, or would any correction from them come with fines?

I agree with your calculation of SDLT on the staircasing transaction of £1,671, using the method you set out, assuming:

(a)  The property is in England
(b)  You do not now have other property interests
(c)  You are keeping the property (there is no back to back sale of the property)
(d)  When you bought in Feb 2013 you bought from the social landlord (not from someone who had previously bought from a social landlord.

The "Additional Tax" referred to on the website is extra tax on the first transaction (in your case the Feb 2013 purchase) as a result of the later staircasing over 80%.  But that only applies if the original purchase was before 12 March 2008, so that does not apply in your case.

Assumptions 'a' to 'c' are corrrect, regarding 'd':

I bought the property as a re-sale in 2013, obtaining the 40% share that the first owner of the property had acquired from the Housing Association and an additional 10% directly from the Housing Association (in effect a staircasing transaction) to take my share of the property to 50%

The fact that you did not buy the lease from the housing association changes things.  For one thing, you could not have elected to pay SDLT on market value at that time.  But if the previous owners had elected to pay on market value when they took the lease, then there would be no SDLT for you to pay on staircasing.  (Assuming you did not take the lease from close relatives.)
  
Assuming for now that the previous owners did not elect, then you need to work out SDLT on staircasing allowing for any "linking".  Your staircasing payment of £155K is not linked to the amount you paid the previous owners, but would be linked to any previous staircasing by you.

If you staircased by 10% in Feb 2013 and paid the HA £20K for that, then the total linked payments are £175K.  SDLT on £175K now would be £1,000.  You pay SDLT on a fraction of £1,000.  The fraction is £155K / £175K.  That gives SDLT of £886.

I would not be surprised if in Feb 2013 the previous owners staircased and you paid them the whole £100K.  If that is the case, there is no linking for you now.  So you pay SDLT on £155K, which is £600.

I have found a note from a meeting with HMRC on 8 April 2022: "HMRC confirmed that they do not see the payments made by the original lessee as linked to staircasing payments made by the (unconnected) assignee, nor the payment made by the assignee for taking the lease as linked to staircasing payments made to the RSL."  They say they will confirm this in guidance.