SDLT and NPV

tony3619

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

SDLT_Geek

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

tony3619

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

SDLT_Geek

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

tony3619

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

SDLT_Geek

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

tony3619

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

Could it be the case that the discount applied to the 5 year estimates took it under the threshold?

As they state £0 was to be paid on the purchase percentage and £0 on the lease premium 

SDLT_Geek

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

Could it be the case that the discount applied to the 5 year estimates took it under the threshold?

As they state £0 was to be paid on the purchase percentage and £0 on the lease premium 

I doubt it.  When I plugged in rent of £4,400 for each of the five years I got £124,008.  I expect if you put in figures with the increases you refer to, it would come to over £125,000.  I suggest you try it and see what you get. 

I would not expect it to be a significant amount of SDLT, but if there was an error in the return and SDLT due, it would go back to 2016.

tony3619

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

Could it be the case that the discount applied to the 5 year estimates took it under the threshold?

As they state £0 was to be paid on the purchase percentage and £0 on the lease premium 

I doubt it.  When I plugged in rent of £4,400 for each of the five years I got £124,008.  I expect if you put in figures with the increases you refer to, it would come to over £125,000.  I suggest you try it and see what you get. 

I would not expect it to be a significant amount of SDLT, but if there was an error in the return and SDLT due, it would go back to 2016.

i make the value £4 

SDLT_Geek

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

Could it be the case that the discount applied to the 5 year estimates took it under the threshold?

As they state £0 was to be paid on the purchase percentage and £0 on the lease premium 

I doubt it.  When I plugged in rent of £4,400 for each of the five years I got £124,008.  I expect if you put in figures with the increases you refer to, it would come to over £125,000.  I suggest you try it and see what you get. 

I would not expect it to be a significant amount of SDLT, but if there was an error in the return and SDLT due, it would go back to 2016.

i make the value £4 

You mean the HMRC calculator tells you the Net Present Value just over £125,000 and the SDLT due on it £4?

tony3619

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

SDLT_Geek said:

tony3619 said:

Hello, 

So I purchased a property in 2016 and at the time my solicitor worked out no stamp duty was due as It was a shared ownership plus I had first to.e buyers relief. 

I'm trying to get a better understanding of these kinds of topics etc. 

I understand as my share was £105000 and I opted to pay in stages the SDLT on my share was £0. 

What I dont seem to be able to work out is how to take my NPV which started at £4400 per annum back in 2016 (125 year lease) and work out how no sdlt was due on this part? Does first time buyer relief apply to NPV also?

I will assume the property was in England so that the relevant stamp duty was stamp duty land tax (you do mention SDLT).

In 2016 there was no first time buyers' relief; that came in with effect from 23 November 2017.  But it seems that does not matter, because if you put the rent figures and the length of the lease into the SDLT calculator here https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro it gives the net present value of the rents as £124,008, which is below the threshold of £125,000.  So, without the election for market value, no SDLT was due on taking the lease.

Just to check: you bought from a social landlord, so the form of the transaction was that you took the grant of a new lease (as opposed to taking a transfer / assignment of a pre-existing lease)?

Thanks for the reply. 

I'm abit confused on how you worked out the 1-5 year rent prediction to use that online calculator you linked? 

I purchased from a housing association as a first time buyer with a new lease 

I used a rent of £4,400 for each of the first 5 years of the lease.  Typical shared ownership leases link rent reviews to the retail prices index and a special SDLT rule for calculation the net present value provides that increases due to the RPI are to be ignored.

My lease states rent will rise by RPI + 0.5% so should the 4400 not increase by that about or am I misunderstanding? 🫣

That makes a difference, I recall it means the increases do not get ignored, so in the first instance the rents for the first 5 years need to be estimated.  

I expect in your case that would take the NPV over the threshold and mean a small amount of SDLT was due.

Could it be the case that the discount applied to the 5 year estimates took it under the threshold?

As they state £0 was to be paid on the purchase percentage and £0 on the lease premium 

I doubt it.  When I plugged in rent of £4,400 for each of the five years I got £124,008.  I expect if you put in figures with the increases you refer to, it would come to over £125,000.  I suggest you try it and see what you get. 

I would not expect it to be a significant amount of SDLT, but if there was an error in the return and SDLT due, it would go back to 2016.

i make the value £4 

You mean the HMRC calculator tells you the Net Present Value just over £125,000 and the SDLT due on it £4?

Yes exactly this, I basically added 0.5% to each figure