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    • Scorer15
    • By Scorer15 14th Jan 20, 6:42 PM
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    Scorer15
    What stamp duty do I pay?
    • #1
    • 14th Jan 20, 6:42 PM
    What stamp duty do I pay? 14th Jan 20 at 6:42 PM
    Hi all, I have a query about what stamp duty I am legally obliged to pay when staircasing from 50% shared equity to 100% as nobody I ask seems sure.

    We bought 50% of a property in a shared ownership scheme. The property was worth 193,000 and therefore under the threshold of 250,000 which meant at the time that as first time buyers we didn't need to pay stamp duty. We are now looking to staircase to 100% ownership of the property. The property is now worth 330,000.

    We're taking out a mortgage for 240,000 to cover the 50% of the property that we are purchasing (165,000), as well as the remaining balance on the previous mortgage (75,000). My query is what exactly is the total that the stamp duty calculations is based on? Is this based on the mortgage of 240,000, or would this be based on the 50% value of the property which would be 165,000?

    When I called HMRC (twice) I was told that the two purchases would be treated independently, meaning that there would be no stamp duty to pay on the first 50% that we had already purchased, but that we would need to pay stamp duty on the new 50% purchase, and therefore treated like two totally separate purchases. The two people I have spoken to both confirmed that this would mean paying 2% of the value between the 125,000 threshold up to 165,000 (40,000), meaning a stamp duty of 800. My solicitor initially came up with a different calculation of around 1950 though after they also spoke to the same person at HMRC they are happy to accept the 800 is the total.

    However, as a second point I know that buyers have two choices when they purchase a shared ownership property - one being to pay in stages when they staircase and the other to pay the stamp duty in full based upon their initial purchase price, meaning they don’t pay more stamp duty when they staircase.

    Had we been non-first time buyers of a shared ownership scheme then we would have had the option to pay our stamp duty up front and save on stamp duty when staircasing. However, as first time buyers our property was below the stamp duty threshold and so we never had any option to pay anything up front.

    Does anyone have any experience of this and would you think we should be paying zero or 800? I agree that if it is treated as two separate purchases then technically we should be paying.On the other hand we are still essentially first time buyers, we're just buying the rest of our home now, when we didn't have that option to pay stamp duty up front because we were under the threshold.

    I've now written to HMRC by post as they don't appear to use email and wouldn't do anything over the phone other than tell me to write in to them. If their reply isn't forthcoming then I will have to go with the paying 800 as this is all the solicitor would proceed with. I was just curious if anyone had gone through something similar.

    Thanks!
    Last edited by Scorer15; 14-01-2020 at 6:45 PM.
Page 1
    • SDLT Geek
    • By SDLT Geek 14th Jan 20, 8:48 PM
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    SDLT Geek
    • #2
    • 14th Jan 20, 8:48 PM
    • #2
    • 14th Jan 20, 8:48 PM
    For me to be able to help, please say:

    1. On what date did you buy the initial 50% share?

    2. Did you buy the initial 50% direct from the social landlord? That sounds most likely from what you say. Or perhaps the social landlord granted a lease to someone else who then sold the lease to you.
    • 00ec25
    • By 00ec25 14th Jan 20, 8:52 PM
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    00ec25
    • #3
    • 14th Jan 20, 8:52 PM
    • #3
    • 14th Jan 20, 8:52 PM
    pending the facts SLT geek has asked for so he can do the calculation for you, you could actually work it out yourself by simply reading the HMRC info

    market value election? n/a from what you say
    so read example 2
    https://www.gov.uk/guidance/sdlt-shared-ownership-property

    bear in mind HMRC call centre staff are not technical experts and barely know what day of the week it is, let alone be able to answer tax questions
    • Scorer15
    • By Scorer15 14th Jan 20, 10:01 PM
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    Scorer15
    • #4
    • 14th Jan 20, 10:01 PM
    • #4
    • 14th Jan 20, 10:01 PM
    The initial 50% was purchased in April 2012 and it was direct from a housing association, a new build.

    Well the calculator doesn't fit the situation which is the difficulty. It gives you the option to pay up front (we weren't able to do this because we were also first time buyers so were under the threshold), or pay upon staircasing, which we are doing. However, it's not that we decided to pay upon staircasing, we just didn't even know there were options. Obviously given the option of paying upon initial purchase I would have opted for the 'I'll pay the stamp duty in full right now' option as I know the stamp duty would have been zero for a first time buyer.

    So the example doesn't factor in that we were actually first time buyers AND shared ownership. It seems that they have rules for being a shared ownership buyer, and rules for first time buyer, but not both. And it isn't clear that if you're staircasing whether you are still a first time buyer or if it's considered your second purchase. If we are still first time buyers then we shouldn't be paying stamp duty imo as the property upon initial purchase was under the threshold at the time. If it's considered a second purchase then we maybe should be paying, but again if we are staircasing I would have liked that initial option to pay stamp duty up front that I didn't get. Maybe I didn't get the option because the value of the stamp duty was zero?

    So from them saying it's like 2 separate purchases it sounds like the latter, but as you say I don't really trust the staff on the phones, and they couldn't tell me if I was a first time buyer, or whether I should have had the option of paying stamp duty up front upon initial purchase. It's just a case of hoping for some clarity through the post which I doubt I will get. I'll probably have more questions than answers.

    To be honest, I'll pay the 800, it's not that I think it's excessive or anything, but obviously if someone has been through this and knows different then I'd obviously prefer not to need to pay!
    Last edited by Scorer15; 14-01-2020 at 10:17 PM.
    • 00ec25
    • By 00ec25 14th Jan 20, 10:17 PM
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    00ec25
    • #5
    • 14th Jan 20, 10:17 PM
    • #5
    • 14th Jan 20, 10:17 PM
    The initial 50% was purchased in April 2012 and it was direct from a housing association, a new build.

    Well the calculator doesn't fit the situation which is the difficulty. It gives you the option to pay up front (we weren't able to do this because we were also first time buyers so were under the threshold), or pay upon staircasing, which we are doing. However, it's not that we decided to pay upon staircasing, we just didn't even know there were options. Obviously given the option of paying upon initial purchase I would have opted for the 'I'll pay the stamp duty in full right now' option as I know the stamp duty would have been zero for a first time buyer.

    So the example doesn't factor in that we were actually first time buyers AND shared ownership. It seems that they have rules for being a shared ownership buyer, and rules for first time buyer, but not both. And it isn't clear that if you're staircasing whether you are still a first time buyer or if it's considered your second purchase. If we are still first time buyers then we shouldn't be paying stamp duty imo as the property upon initial purchase was under the threshold at the time. If it's considered a second purchase then we maybe should be paying, but again if we are staircasing I would have liked that initial option to pay stamp duty up front that I didn't get.

    So from them saying it's like 2 separate purchases it sounds like the latter, but as you say I don't really trust the staff on the phones, and they couldn't tell me if I was a first time buyer, or whether I should have had the option of paying stamp duty up front upon initial purchase. It's just a case of hoping for some clarity through the post which I doubt I will get. I'll probably have more questions than answers.

    To be honest, I'll pay the 800, it's not that I think it's excessive or anything, but obviously if someone has been through this and knows different then I'd obviously prefer not to need to pay!
    Originally posted by Scorer15
    read shared ownership paragraphs on page 10 of the document available here:
    https://www.gov.uk/government/publications/stamp-duty-land-tax-relief-for-first-time-buyers-guidance-note

    the final sentence of the paragraph headed "paying SDLT in stages" will give you your answer

    you can then go back to example 2 of the link previously referenced...
    Last edited by 00ec25; 14-01-2020 at 10:20 PM.
    • Scorer15
    • By Scorer15 14th Jan 20, 10:21 PM
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    Scorer15
    • #6
    • 14th Jan 20, 10:21 PM
    • #6
    • 14th Jan 20, 10:21 PM
    Ok but in that example the cost of the property as a whole is above the threshold that means it qualifies for stamp duty upon initial purchase. So they could elect to pay the stamp duty up front in full. My property was below the threshold for stamp duty so I didn't have an option to pay anything as there was nothing to pay. Now that my property is above the threshold it's almost like I'm being forced into the second option which is paying stamp duty upon staircasing, which doesn't see fair.
    • 00ec25
    • By 00ec25 14th Jan 20, 10:31 PM
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    00ec25
    • #7
    • 14th Jan 20, 10:31 PM
    • #7
    • 14th Jan 20, 10:31 PM
    Ok but in that example the cost of the property as a whole is above the threshold that means it qualifies for stamp duty upon initial purchase. irrelevant in the context of your question So they could elect to pay the stamp duty up front in full. My property was below the threshold for stamp duty so I didn't have an option to pay anything as there was nothing to pay. Now that my property is above the threshold it's almost like I'm being forced into the second option which is paying stamp duty upon staircasing, which doesn't see fair.
    Originally posted by Scorer15
    you ask your original conveyancing solicitor for a copy of the SDT return they had to do at the time of purchase

    it will be a matter of fact whether you did, or did not, make a market value election - I will take as read you had no idea what was going on at the time, but your conveyancer did, and should have asked you and recorded your response, so they have evidence they can rely if you now challenge it.

    if you did not make a market value election then example 2 applies

    HMRC have your SDT return from the purchase and they know exactly what election you made - you can of course alternatively obtain a copy of your SDLT return from them if you no longer have contact with the original conveyancer.
    Last edited by 00ec25; 14-01-2020 at 10:34 PM.
    • Scorer15
    • By Scorer15 14th Jan 20, 10:37 PM
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    Scorer15
    • #8
    • 14th Jan 20, 10:37 PM
    • #8
    • 14th Jan 20, 10:37 PM
    Well given my solicitor was trying to ask me for 1950 then I assume I didn't make any such election, as I'm using the same solicitor now. You're correct in that at that time I didn't really think about what staircasing was going to mean for stamp duty, I was just relieved to be getting a place and was told by the housing agency that stamp duty was zero. However, whether that was because of it being an initial purchase or because it was under the threshold it's unclear. Thanks for the responses anyway, I think purely just to get it through before the valuation expires I'll end up paying the 800 and potentially chase a reply after from HMRC.

    I've just seen your edit. I guess I can request this from HMRC then and see what was declared. I definitely was not asked whether I wanted to pay stamp duty up front, but at the same time it would have been a silly question because there was zero to pay with it being under the threshold.
    Last edited by Scorer15; 14-01-2020 at 10:40 PM.
    • 00ec25
    • By 00ec25 14th Jan 20, 10:59 PM
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    00ec25
    • #9
    • 14th Jan 20, 10:59 PM
    • #9
    • 14th Jan 20, 10:59 PM
    but at the same time it would have been a silly question because there was zero to pay with it being under the threshold.
    Originally posted by Scorer15
    nonetheless a competent conveyancing solicitor should know the shared ownership rules and have made damn sure they did what was best at the time - which would have been a market value election, for the reasons you outline ....
    • SDLT Geek
    • By SDLT Geek 14th Jan 20, 11:01 PM
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    SDLT Geek
    First time buyers' relief was not in effect in April 2012. The first version expired on 24.03.2012. So your choice was to:

    (a) pay SDLT at the time on the 96,500 paid which came to zero (but pay some if you staircased to over 80%) or
    (b) to pay on the full market value. That would have been 1,930 at the time.

    The position on staircasing is that 1,940 is due. This is worked out as follows:

    1. Add up the sums you pay for the lease. 96,500 for the first 50%, 165,000 for the rest. That is 261,500.

    2. Work out the SDLT on 261,500 at today's rates. That is 3,075.

    3. But you pay SDLT on a fraction of that. The fraction is 165,000 / 261,500.

    4. That fraction of 3,075 is 1,940.

    It seems that you made a good decision to pay zero SDLT. You have kept the use of your 1,930 all of this time and only now have to pay a few pounds more. A result!

    Paying 800 now is not an option, SDLT is a self-assessed tax and it is up to you to get it right.
    • Scorer15
    • By Scorer15 14th Jan 20, 11:13 PM
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    Scorer15
    Sorry we moved into the property in April 2012 but actually completed the purchase prior to that. It was a brand new build and we were the first people to move in. There were delays in the build so we didn't actually move in and start paying the mortgage until April but we had technically completed the mortgage a few months beforehand. I'm just used to saying April as that's when the mortgage runs from.

    SDLT Geek i think this must be the calculation that the solicitor is now using, although they are now satisfied that 800 is the number. They said that they need to go with what they know to be true to the best of their knowledge at the time of submission and are accepting HMRC's phone advice for that. As I say, I can afford the stamp duty and think it's actually very cheap, it's just one of those technicalities that didn't seem clear and finding an exact answer hasn't been easy.

    I'm more than happy to pay the 800 and if HMRC want to come chasing me for more that I'm due to pay then that's fine, at least I might be able to engage them in more of a conversation when they want something rather than someone on the phone who knows very little, or relying on postal letters.
    Last edited by Scorer15; 14-01-2020 at 11:18 PM.
    • Tom99
    • By Tom99 15th Jan 20, 4:29 AM
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    Tom99
    Sorry we moved into the property in April 2012 but actually completed the purchase prior to that. It was a brand new build and we were the first people to move in. There were delays in the build so we didn't actually move in and start paying the mortgage until April but we had technically completed the mortgage a few months beforehand. I'm just used to saying April as that's when the mortgage runs from.

    SDLT Geek i think this must be the calculation that the solicitor is now using, although they are now satisfied that 800 is the number. They said that they need to go with what they know to be true to the best of their knowledge at the time of submission and are accepting HMRC's phone advice for that. As I say, I can afford the stamp duty and think it's actually very cheap, it's just one of those technicalities that didn't seem clear and finding an exact answer hasn't been easy.

    I'm more than happy to pay the 800 and if HMRC want to come chasing me for more that I'm due to pay then that's fine, at least I might be able to engage them in more of a conversation when they want something rather than someone on the phone who knows very little, or relying on postal letters.
    Originally posted by Scorer15
    It's unlikely you completed on the purchase a few months before you were allowed to move in but download the latest title register which will give you the date you completed:

    https://eservices.landregistry.gov.uk/eservices/FindAProperty/view/QuickEnquiryInit.do
    • Scorer15
    • By Scorer15 17th Jan 20, 1:01 PM
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    Scorer15
    Well I just mean that it was like we were all done and dusted with admin and then were told we couldn't move into the new build and were told to wait.Then we moved in around April. It could even have been in March, I just know the first mortgage payment was in the April.

    I think it would have been a bit unfair at that point to say 'well today there's been a law change and now you have to pay stamp duty through no fault of your own even though you had everything in place months ago and were literally waiting to pick up the key'. I just know that it was outlined to us that stamp duty wasn't something we had to consider. When I was told that stamp duty isn't something you need to think of as a first time buyer by the housing agency I was buying from I didn't automatically think I needed to opt into paying the sum of zero in case of future purchases.

    And thanks I'll check that out!

    Edit - Turns out it was 10th April according to the land registry
    Last edited by Scorer15; 17-01-2020 at 1:19 PM.
    • SDLT Geek
    • By SDLT Geek 18th Jan 20, 12:21 PM
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    SDLT Geek
    I think it would have been a bit unfair at that point to say 'well today there's been a law change and now you have to pay stamp duty through no fault of your own even though you had everything in place months ago and were literally waiting to pick up the key'. I just know that it was outlined to us that stamp duty wasn't something we had to consider. When I was told that stamp duty isn't something you need to think of as a first time buyer by the housing agency I was buying from I didn't automatically think I needed to opt into paying the sum of zero in case of future purchases.
    There was no "wriggle room" for the ending date of the previous incarnation of first time buyers' relief on 24 March 2013. But as it was, it was a sensible decision on 10 April 2013 for you not to elect to pay SDLT on the market value then, but to keep the use of the money unless and until you staircased to over 80%.

    Edit - Turns out it was 10th April according to the land registry
    Originally posted by Scorer15
    So that makes the SDLT legally due on staircasing out 1,940 (using your figures).
    • Scorer15
    • By Scorer15 18th Jan 20, 12:23 PM
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    Scorer15
    Just out of curiosity, if the solicitor has phoned HMRC and thinks themselves that we are now due to only pay 800 and I pay that,what would happen? Like would HMRC come chasing for the remainder if they think it should be more or could it potentially be more than that, or more serious than that?
    • 00ec25
    • By 00ec25 18th Jan 20, 1:05 PM
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    00ec25
    Just out of curiosity, if the solicitor has phoned HMRC and thinks themselves that we are now due to only pay 800 and I pay that,what would happen? Like would HMRC come chasing for the remainder if they think it should be more or could it potentially be more than that, or more serious than that?
    Originally posted by Scorer15
    if you are asking will tax evasion be detected, the answer is possibly, may be, yes, no. If found out will you be penalised? yes. How badly? depends

    HMRC computers will spot the original SDLT returns and the new one. Those computers may be programmed to flag up instances where the figures don't add up, and an error threshold has been tripped.

    I appreciate it is tempting to pay less money because you want to, but really what you ought to be doing is asking the solicitor to revisit their calculation having shown them this thread.

    SDLT on Shared ownership is not bread and butter work for solicitors, unlike ordinary conveyancing and many of them have little experience of it. Even SDLTGeek had no knowledge of it before coming here, but now he does, and his calculations correspond with HMRC guidance which you can check yourself in the links already given to you by applying your numbers to example 2. Your solicitor's patently do not.
    Last edited by 00ec25; 18-01-2020 at 1:07 PM.
    • Scorer15
    • By Scorer15 19th Jan 20, 2:05 AM
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    Scorer15
    Well it's not so much I want to avoid it, it's just that it had so far seemed that neither me, the solicitor, nor HMRC have been able to put an exact figure on it, nor decide things such as if I am still a first time buyer. Unfortunately HMRCs lack of availability to engage in dialogue, or confirm in writing what they say on the phone is a major part of that.

    I'll certainly get back in touch with the solictor though and revisit the calculation. Thanks for the replies to the thread to all.
    Last edited by Scorer15; 19-01-2020 at 2:08 AM.
    • 00ec25
    • By 00ec25 19th Jan 20, 3:21 AM
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    00ec25
    Well it's not so much I want to avoid it, it's just that it had so far seemed that neither me, the solicitor, nor HMRC have been able to put an exact figure on it, nor decide things such as if I am still a first time buyer. Unfortunately HMRCs lack of availability to engage in dialogue, or confirm in writing what they say on the phone is a major part of that.

    I'll certainly get back in touch with the solictor though and revisit the calculation. Thanks for the replies to the thread to all.
    Originally posted by Scorer15
    unfortunately following the "cuts", HMRC frontline staff are mostly low level call centre operatives whose training is in how to read scripts from the screen in front of them. Obviously each person must deal with an enormous range of queries, and in the main can answer low level questions satisfactorily, but they lack the depth as you found, are not trained, in how to search HMRC systems themselves and so cannot assist with the depth of knowledge of specific taxes that 5 minutes with google will set you on the track of.

    sadly, the cuts also mean HMRC does not have the resources to pass "deeper" queries back to the few remaining technical staff, (unless they scent money in the making) so calls get brushed off. Theoretically you can still write in and directly ask for your query to be passed back to "technical" - who will give accurate and complete answer. Trouble with that is a) it has to be opened in the first place, and the backlog on merely opening envelopes is often reported to be breathtaking (months not weeks) and b) technical staff have huge workloads and even slower response times.
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