Stamp Duty Land Tax
Stamp duty land tax (SDLT) is payable on the purchase or transfer of land where the value of the land is above a set threshold. These thresholds vary according to whether the land is freehold or leasehold, non-residential or residential or whether the transfer is part of a larger transfer of assets.
In addition to the standard criteria, certain properties attract higher rates of relief. These include new homes that meet “zero carbon” standards for energy efficiency where the threshold is currently £500,000. To add to the complexity, there are cases where the transfer can be exempt from SDLT such as where property is left in a will or where no money or other consideration changes hands.
For those companies and individuals who do have to pay SDLT, the current top rate is 4% for properties over £500,000. This is due to increase to 5% for properties over £1million with effect from April 2011. Property sales of £600,000 can therefore attract a tax of £24,000.
In common with most tax laws, whilst SDLT seems simple, the underlying regulations are complex and it is important that current rulings are followed to avoid being faced with a sizeable tax bill in years to come. One of the benefits of that complexity is that there are legal ways to mitigate SDLT. However, it is vital that a tax law specialist is used when mitigating SDLT as an incorrect interpretation of the regulations will lead to fines and back taxes.
If you are considering SDLT mitigation the first piece of good news is that the vendor doesn’t need to be involved in the mitigation process. The purchaser is also free to use their own solicitor for the transaction although it is generally advisable to use a solicitor recommended by the mitigation specialist to avoid incorrect processes being followed and the tax becoming payable.
In summary, when considering transfers of property, the mitigation of SDLT is a legal method of tax planning. However, it is important that advice is taken from tax mitigation specialists who keep abreast of legislation and HMRC opinion. Newshams prides itself in having a 100% success rate in mitigating stamp duty land tax and ensures that its mitigation strategies are kept up-to-date.
