Help calculating shared ownership stamp duty

Lynniloo41

My solicitor is very confused (worryingly) as to how to calculate my stamp duty on my shared ownership. I'm in the process of purchasing 100% and getting the freehold.  Can anyone help me calculate it as I'm tying myself in knots with it and worried about a massive bill.

2019 house valued £187500 I purchased 50% at £93750.  First time buyer so no stamp duty paid.

2021 house valued at. £195000. I purchased 25% (75% total now) at £48750.   No solicitor involved so no stamp duty paid.


2025 in process of purchasing further 25% (100% and freehold). House valued at £260000. 25%at £65000.


I work out total paid by me from each transaction is £207000  so no stamp duty as it's still under the threshold but my solicitor is sending me all sort of calculations.

Can anyone explain it in the simplest way possible as I don't get the jargon at all.

silvercar

Does this help?

https://www.gov.uk/stamp-duty-land-tax/shared-ownership-property

Lynniloo41

Hi. Thank you.  No this is what I have been reading and can't make head nor tail of it.

This is what my solicitor has sent me which I work out at £11000 which does not seem correct as I think I'm under the threshold. 

((We then need to divide the purchase price for the additional 25% you are now purchasing (£65,000) by the market value of the property (£260,000) = 0.25  (rather helpfully, this is the example in the attached guide).

 

The two figures are then multiplied (Stamp duty due on previous transactions x 0.25 = x).  This then becomes the amount of stamp duty which is paid on the transaction.))

  When I use the online calculators ( which are not to calculate starcasing unfortunately)

They say no stamp duty for £207000 I have paid or if I go on current market value of £260000 I have to pay £500.  As it's such a massive difference between my calculation and my solicitors I was wondering if anyone can help me work it out .

kingstreet

If you haven't you might want to post this on HBR&S as it's more appropriate than the mortgage forum. Most of the SDLT wallahs, particularly SDLT Geek, post mainly on there.

ResourcesShared

The website Shared Ownership Resources has some useful features on SDLT.
You could also try calling HMRC's SDLT Helpline - https://www.gov.uk/government/organisations/hm-revenue-customs/contact/stamp-duty-land-tax

silvercar

kingstreet said:

If you haven't you might want to post this on HBR&S as it's more appropriate than the mortgage forum. Most of the SDLT wallahs, particularly SDLT Geek, post mainly on there.

Good point. I’ll move this to the housing board. Hopefully @SDLT_Geek will visit.

SDLT_Geek

Lynniloo41 said:

My solicitor is very confused (worryingly) as to how to calculate my stamp duty on my shared ownership. I'm in the process of purchasing 100% and getting the freehold.  Can anyone help me calculate it as I'm tying myself in knots with it and worried about a massive bill.

2019 house valued £187500 I purchased 50% at £93750.  First time buyer so no stamp duty paid.

2021 house valued at. £195000. I purchased 25% (75% total now) at £48750.   No solicitor involved so no stamp duty paid.


2025 in process of purchasing further 25% (100% and freehold). House valued at £260000. 25%at £65000.


I work out total paid by me from each transaction is £207000  so no stamp duty as it's still under the threshold but my solicitor is sending me all sort of calculations.

Can anyone explain it in the simplest way possible as I don't get the jargon at all.

I will assume the property is in England, so the relevant stamp duty is stamp duty land tax.

There should be no SDLT to pay.

1.  At the time of the 2019 purchase it would have made sense to elect to work out the SDLT on the whole price.  As a first time buyer, up to £300,000 was tax free at the time.  If you elected for that treatment, then there would be no more SDLT to pay, even on staircasing over 80%.

2.  Even if something went wrong in 2019 (and no election was made), there would still be no SDLT to pay if you complete the staircasing by 31 March 2025.  Until then the threshold is £250,000.  Adding up the payments made gives £207,500.  That is below £250,000 so there is no SDLT to pay.

3.  Just so you can see how the calculation works, let us assume that the election was not made in 2019 and the staircasing out to 100% only completes after 31 March 2025.  The threshold for SDLT will then be £125,000.  SDLT at 2% on the excess of the £207,500 over £125,000 (£82,500) is £1,650.  But the SDLT on the staircasing transaction is a fraction of the £1,650.  The fraction is £65,000 / £207,500.  That would be SDLT of £517.

Lynniloo41

Thank you.  This helps massively.  Iv looked back and my 2019 solicitor didn't even mention stamp duty except filling a form to register zero payment on my invoice.  


I feel I'm better armed to go back to my current solicitor as her estimate is way out there.


I'm now on a mission to get it through before the end of march.

Lynniloo41

I'm hopefully going for a completion this Friday to avoid paying stamp duty,but the way things have gone so far I'm not holding my breath and bracing your a big bill.   


I fed the information from this group back as suggested I need to only pay £518 ,but my solicitor is insisting it's £1650 now as I need to pay for the whole purchase price of £207,500.


I don't have the original stamp duty form for the first 50% as the solicitor is not getting back to me and avoiding my calls and messages. Iv just got a letter saying they will now register it.   


This is the reply from my solicitor. Do you think it's correct to pay it on the fullmourcashe value.


(Yes, Stamp Duty is worked differently on shared ownership transactions.

 

If you did not elect to pay stamp duty on the full market value at the time of purchase (which is why I have also requested a copy of your previous Stamp Duty Land Tax Return), then when you come to buy further shares in the future, they are considered for Stamp Duty.

 

You do not have to pay/consider stamp duty until you own an 80% share in the property. As this final purchase will take you to 100%, we now need to look at Stamp Duty based on the total paid for the property to date.

 

You no longer qualify for first time buyer status as you are the owner of the property. The stamp duty calculation is in accordance with HMRC Guidance (see attached). We also have to consider the linked transactions element of SDLT.

 

In any event, if we can complete before the end of March then there will be no stamp duty to pay (but we will need to submit a Return). I have contacted the Council this morning to suggest we aim for the 28th March for completion. I will need confirmation of this date as soon as possible so that I can request your mortgage funds.

 

I will revert back to you with documents for signing shortly.)

Bookworm105

Lynniloo41 said:

I fed the information from this group back as suggested I need to only pay £518 ,but my solicitor is insisting it's £1650 now as I need to pay for the whole purchase price of £207,500.

 

You no longer qualify for first time buyer status as you are the owner of the property. The stamp duty calculation is in accordance with HMRC Guidance (see attached). We also have to consider the linked transactions element of SDLT.

So your solicitor seems to have misunderstood the linked transactions element!
as geek stated, the actual charge would be based on the fraction £65,000 / £207,500

perhaps ask them to show their calculation compared to example 1 ...
Stamp Duty Land Tax: shared ownership property - GOV.UK


(or perhaps until they have a copy of the first SDLT return they are treating this as 100% purchase in one go?)