For SDLT is the developers contribution to SDLT & chattel cost deducted before calculating this?

Faaye13

I'm hoping someone may be able to help me get my head around this. 

I'm about to complete a purchase on a new build home with the purchase price being £399'999. 

The developers had an offer where they gave me 20K to spend as I wished in having upgrades or just having the money. After upgrading various bits and having the carpets and flooring etc, I am left with £13'619 which they have documented as a stamp duty contribution on my paperwork. I also used about £2000 of the 20k budget on carpets which I think is what is considered a chattel. 

Am I supposed to pay SDLT on the full purchase price of £399'999 which is £7'499?

The cash they are giving me has been declared as a SDLT contribution - can I deduct this from the purchase price before calculating SDLT as it's a discount they are giving me? Seems unfair to pay tax on an amount that is £13.5K higher than what I end up paying. This deduction is written on my completion statement issued by my solicitor but they have labelled it is 'less incentives'

Finally, can I deduct the carpet cost from the purchase price before calculating SDLT? That would save me about £125 off the tax, but again its written as an incentive so I'm not sure.

I've also read in some places that when you add upgrades to your home, like fitted appliances etc, you're meant to declare and pay SDLT on that, is this true? I've spent £6.5K on flooring, tiling, shower over tub, fitted washing machine & dishwasher, upgraded hob & extract hood, a few extra sockets and an outdoor socket. 

I called the SDLT helpline and they basically said it's a self-assessed tax so you do what you feel is right. My solicitor said, just pay it on the purchase amount and then claim a refund if you think its wrong - I think he just doesn't want to change the form and amount. 

Completion is tomorrow... so this is a bit of a last-minute panic. 

Any help/advice would be greatly appreciated!

Thanks in advance 

penners324

What does the paperwork say.

Very likely it's £399,999. 

EssexHebridean

The SDLT is usually entered directly from the purchase price showing on the contract and the TR1 (probably TP1, for you?). If in your case, that purchase price is £399,999 then that is the amount that will be entered into the SDLT submission. 

Faaye13

Thank you both and yes this is what it seems. 

I managed to speak to a super helpful tax accountant and he advised me that HMRC use the contract when calculating the SDLT.

@EssexHebridean - yes its a TP1. I've gone through it twice and cannot see that it states the cost of the property on it. It does say in schedule 15 under incentives a stamp duty contribution of £13619

My financial incentive is not written on the section where it states the cost of the property and hence does not reflect as a discount even if it is one. They wrote it as a stamp duty contribution into an appendix at the back of the contract. Also, as carpets are given as an incentive and written as such, the cost of that cannot also be deducted. 

So SDLT was calculated based on the list price of the property of £399999 

The lesson I've learnt from this is that financial incentive needs to be documented next to the list price and reflected as a deduction - this will allow it to be deducted from the total price when doing the tax calculation. I'm not sure though if a developer would agree to this. 

Thank you both again for your replies

EssexHebridean

Consideration payable should be found in panel 9 of your TP1. 

Remember that what the stamp duty is payable on is the consideration paid for the property.. I suspect the developers have good reason for choosing to do it the way they have rather than just reducing the price of the property by that amount, and I very much doubt you would have been successful in asking them to make a reduction instead! 

I think in your shoes I would be looking at it from a perspective of how much worse off I would have been without that £13619!