Stamp duty question when staircasing, Shared Ownership

he_lennie

Hi, 

Any help would be much appreciated as I do not understand exactly how to work out the stamp duty now that I am attempting to staircase to 100%. 

2016 - 50% share of £276,500 (£553K property valuation), paid stamp duty £3,825 + NPV of £921. 
2018 - 20% share of £103,000 (£515K property valuation), no SDLT paid as only staircased to 70%.
2025 - 30% share of £144,000 (£480K property valuation). 

How do I work out how much to pay in stamp duty upon staircasing based on rates before April 1 this year? Please help me understand the process in working this out. 

The HMRC website offers only one practical example and it's not that helpful, same with HMRC call line. I have also written in to HMRC but this appears to have falled down a black hole. I am trying to work out roughly how much this will cost by proceeding with staircasing option. 

Thank you in advance to those trying to help. 

Mark_d

There are a few helpful examples here

https://www.gov.uk/guidance/sdlt-shared-ownership-property

he_lennie

Thanks, it was following these examples where I've got stuck. The legal rep insisted on a stamp duty payment close to £10k but this doesn't seem right to me. 
My understanding is that only the part attributable to the staircasing transaction that resulted in me owning more than 80% would be used in the transaction of the price paid, is this the case? 

SDLT_Geek

he_lennie said:

Hi, 

Any help would be much appreciated as I do not understand exactly how to work out the stamp duty now that I am attempting to staircase to 100%. 

2016 - 50% share of £276,500 (£553K property valuation), paid stamp duty £3,825 + NPV of £921. 
2018 - 20% share of £103,000 (£515K property valuation), no SDLT paid as only staircased to 70%.
2025 - 30% share of £144,000 (£480K property valuation). 

How do I work out how much to pay in stamp duty upon staircasing based on rates before April 1 this year? Please help me understand the process in working this out. 

The HMRC website offers only one practical example and it's not that helpful, same with HMRC call line. I have also written in to HMRC but this appears to have falled down a black hole. I am trying to work out roughly how much this will cost by proceeding with staircasing option. 

Thank you in advance to those trying to help. 

The SDLT on the final staircasing for £144,000 is £3,762, if it completes before 1 April 2025.  It is calculated as follows.

We start by adding up the three amounts paid in linked transactions, that is £523,500.

We next work out the SDLT on £523,500.  If the final staircasing completes before 1 April 2025 that would be £13,675.

We then take a fraction of £13,675.  The fraction is £144,000 / £523,500.  That gives SDLT on the staircasing out of £3,762.

he_lennie

Thanks @SDLT_Geek. 

The breakdown and calculation is really helpful, this makes sense to me. Now I have to do battle with the legal rep who is insisting this calculation is incorrect. After an initial stamp duty figure close of nearly £10K, they've revised it down to £6.5K and are convinced that the previous 20% staircasing should also incur SDLT. They are not willing to proceed unless I agree. What a wonderful way to extort customers, as if SO wasn't painful enough. Wish me luck!

SDLT_Geek

he_lennie said:

Thanks @SDLT_Geek. 

The breakdown and calculation is really helpful, this makes sense to me. Now I have to do battle with the legal rep who is insisting this calculation is incorrect. After an initial stamp duty figure close of nearly £10K, they've revised it down to £6.5K and are convinced that the previous 20% staircasing should also incur SDLT. They are not willing to proceed unless I agree. What a wonderful way to extort customers, as if SO wasn't painful enough. Wish me luck!

Good luck with getting that agreed. Do come back if you need any more help.

One way of putting it is that there is no specific charge on staircasing up to 80% (such as on your 20%) although the payment made for those interim staircasing steps (such as 20%) are taken into account, through the linked transactions rules, when working out the SDLT on the staircasing out above 80% (in your case on the final 30%)

SDLT_Geek

You could refer them to this excellent website which explains the rules for SDLT on staircasing. It is written by the eminent Sean Randall.

https://www.sharedownershipresources.org/an-expert-on/stamp-duty-staircasing/

KimKim1212

Hey, 

I found this thread really interesting - but I just can't seem to do the rates myself. I've read through the recommended website which seems a good step by step if you're a dab hand with numbers. Would you be able to help?

I bought the property in 2017, I own 35% believe the property was £305k. I £398 stamp duty for my share back then.

I'm looking to go to 100% and buying the remaining £260k (est value £400k) from the housing group, I just can't seem to work out how much stamp duty I'm looking at. It would be good to understand rates pre & post 1st April...

Thanks! 

SDLT_Geek

KimKim1212 said:

Hey, 

I found this thread really interesting - but I just can't seem to do the rates myself. I've read through the recommended website which seems a good step by step if you're a dab hand with numbers. Would you be able to help?

I bought the property in 2017, I own 35% believe the property was £305k. I £398 stamp duty for my share back then.

I'm looking to go to 100% and buying the remaining £260k (est value £400k) from the housing group, I just can't seem to work out how much stamp duty I'm looking at. It would be good to understand rates pre & post 1st April...

Thanks! 

The calculation depends on the detail, but I assume the property is in England, you took the grant of a new long lease in 2017 from a social landlord, you own no other properties and are UK resident.  I am working on the basis that you paid £106,750 for the 35% share, so with the £260,000 now to be paid, that makes a total of £366,750 paid.

Give the amount of SDLT paid in 2017 it seems that the election to pay SDLT on market value was not made, but SDLT was paid on the net present value of the rent.

If the staircasing out completes by 31 March 2025 then the figures look like this:
SDLT on £366,750 would be £5,837.  But we take a fraction of this.  The fraction is £260,000 / £366,750.  That gives SDLT of £4,138.

If the staircasing out completes after 31 March 2025 then the figures look like this:
SDLT on £366,750 would be £8,337.  But we take a fraction of this.  The fraction is £260,000 / £366,750.  That gives SDLT of £6,910.