Stamp Duty Land Tax - the recurring nightmare
There was a time when the calculation of stamp duty as was and SDLT was a relatively simple exercise. You had bands against which the value of the property determined a percentage of stamp duty that was applied. Not so now!
The only way to calculate SDLT now is to submit relevant details into the HMRC’s online calculator. Even then, this can prove a daunting task as the interpretation of rules relating to surcharge payments are notoriously complicated.
We are constantly saying to clients to take real care in the calculation of the particular rate. Lots of issues arise over multiple dwellings, mixed developments and the status of gardens and bare land. There is an indication that HMRC’s guidance on the application of SDLT relating to gardens and ground is going to be updated. The suggestion is that if gardens and grounds are sold separately from a dwelling, the acquisition by the purchaser will be treated as residential irrespective of whether that part of the garden/ground has been separately or fenced off or made physically inaccessible to the vendor. If, however, at the effective date of the transfer there is no longer a building that is used or is suitable for use as a dwelling, then the garden/grounds will be considered as being no longer residential. There are complicated considerations to have where buildings are in the process of being constructed and I think there is a need for clear guidance in the area.
Care also needs to be applied when properties are bought where there is a residential annex or carer’s flat that is included within the property. It is possible that in such circumstances multiple dwelling relief would apply which can lead to some significant SDLT savings.
Hopefully some of the complexities will be ironed out with subsequence guidance and we will wait and see how this unfolds from HMRC.
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