Stamp Duty Staircasing to Freehold

Dibs88

Hi fellow MSE’s,

I’m sure someone will be able to help with the following, and thank you in advance to anyone that can help.
Currently purchasing the remaining shares of our shared ownership property, and trying to work out how much SDLT that should be paid, and so far our solicitor has not a clue, with a chocolate teapot being more use. I have contacted HMRC and the polite lady, couldn’t even acknowledge it was a staircase property.

So far the following figures have been presented £3200, £2150, £1580 and £680, so hence why have appeared here.

Below are the figures

• Property value in 2019: £200,000
• 40% Purchased = £80,000
• No SDLT paid at the time
• No market-value election
• Current valuation: £265,000
• Buying the remaining 60% = £159,000
• Final ownership: 100%
• Own no other residential property
• Previously owned a property

Any help would be appreciated.

Bigphil1474

I looked on this site - this is my calcs.

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

"SDLT if you buy more shares

If you buy any more shares in the property, you do not have to pay any more SDLT or send a return to HMRC until you own more than an 80% share.  

Once your share of the property goes over 80% you must send a return and pay SDLT on:

• the transaction that took you over 80%
• any transactions after that 

Calculating your SDLT

To work out the SDLT if you buy more shares that take you over 80%:

1. Work out the SDLT due on the total you’ve paid for the property to date - include any amounts you did not pay tax on. Use the residential rate that applies at the time you bought the new share. For example, if you’ve paid £260,000 in total so far, the total SDLT due is £3,000 (0% on the first £125,000, 2% on the second £125,000 and 5% on the final £10,000).
2. Divide the amount you’re paying for this share by the total amount you’ve paid for the property to date. For example, if you’re paying £65,000 for this share, divide £65,000 by £260,000 = 0.25.
3. Multiply the two figures, for example SDLT of £3000 multiplied by 0.25 = £750. This is the amount you would need to pay in SDLT for this share."

1. At £239k total price - total stamp duty is £2,280

2. £159k/£239k = 0.665

3. Multiply both = £1,517

sherlock228

you have gone beyond the 80% ownership threshold (and in the absence of a market value election on the initial purchase) you are therefore liable for SDLT as calculated.

the fact you purchased the first share well after 12 March 2008 (rule change date) means you are not liable for "additional" SDLT on that first 80k transaction as it cannot now be "linked" to the subsequent transactions, so your total tax due is £1,517

personally I prefer the examples page, especially example 2

Stamp Duty Land Tax: shared ownership property - GOV.UK

ResourcesShared

This Shared Ownership Resources Q&A on SDLT on shared ownership properties might be helpful in understanding how it's calculated. It was written by a stamp duty expert, and includes a number of different examples.

https://www.sharedownershipresources.org/stamp-duty-staircasing/

It's a shame HMRC weren't helpful when you called. But they publish an SDLT calculator. And you could always try calling again to see if you get someone more knowledgeable this time around, to sense check the result you get from the online calculator.

https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro

Dibs88

Thanks to everyone who have commented, and helps a lot. Will try HMRC again and hopefully get someone who understands shared ownership staircasing ☺️

SDLT_Geek

https://forums.moneysavingexpert.com/discussion/comment/82140563#Comment_82140563

I agree with £1,517.