Discussion
Just googled Stamp Duty to see what we were in for if we buy the house we like (gulp)
And a website popped up with an offer of how to avoid it, claiming to be legal with full disclosure to the HMRC.
It sounds like a 'to good to be true' deal, but always worth checking out.
What thoughts.
V.
And a website popped up with an offer of how to avoid it, claiming to be legal with full disclosure to the HMRC.
It sounds like a 'to good to be true' deal, but always worth checking out.
What thoughts.
V.
Last I heard the HMRC are getting quite hot on these schemes.
The ones i've read about basically involve you agreeing to buy certain items in the house (for example fridges, i.e. - things that are not part of the structure of the house) as a seperate transaction with the vendor to try and get the actual house transaction underneath a stamp duty threshold. The problem is that you need to make sure you are paying a sensible market price for these items, i.e. you can't buy a ten year old fridge and a leaky washing machine for £5000! Personally I think that if the house value is that close to the stamp duty threshold then you just need to negotiate harder with the vendor, no sane vendor will expect to sell a house for say £255-260,000 with the curreent stamp duty laws.
The ones i've read about basically involve you agreeing to buy certain items in the house (for example fridges, i.e. - things that are not part of the structure of the house) as a seperate transaction with the vendor to try and get the actual house transaction underneath a stamp duty threshold. The problem is that you need to make sure you are paying a sensible market price for these items, i.e. you can't buy a ten year old fridge and a leaky washing machine for £5000! Personally I think that if the house value is that close to the stamp duty threshold then you just need to negotiate harder with the vendor, no sane vendor will expect to sell a house for say £255-260,000 with the curreent stamp duty laws.
Spliting house prices between the "Land and Buildings" element (on which Stamp Duty is charged) and "Fixtures abnd Fittings" ( which aretamp Duty free) has been going on since time imemorial. HMRC are totally wise to this and have closed down most of the blatant abuses of this trick.
Fixtures and fittings are still exempt - but they need to be valued realistically.
Fixtures and fittings are still exempt - but they need to be valued realistically.
scotal said:
Might this not be referring to the schemes involving limited companies?
HMRC have said this is a perceived loophole that they are confident doesn't exist.
They are also confident that they will win test cases in court.
Not sure if they have identified any test cases yet.
What do you mean in relation to limited companies?HMRC have said this is a perceived loophole that they are confident doesn't exist.
They are also confident that they will win test cases in court.
Not sure if they have identified any test cases yet.
If you buy a company and its assets then Stamp Duty on the Share Transfer is 0.5% and that covers any land assets etc. But SDLT is still applicable at market value when the land is transferred out of the limited company, unless it is a transfer within a group.
If you are buying a block of flats and there is no headlease then SDLT is calculated on the value of each flat.
http://www.bbc.co.uk/news/business-15479321
This was in the news a few weeks back
I know HMRC keep saying they are clamping down but the companies offering the schemes seem fairly confident that their schemes are legal and meet the law
I guess we will have to wait and see what happens if one goes to Court.
This was in the news a few weeks back
I know HMRC keep saying they are clamping down but the companies offering the schemes seem fairly confident that their schemes are legal and meet the law
I guess we will have to wait and see what happens if one goes to Court.
This is not a statement of fact and I have no idea if there is any truth in it at all, but I read a while ago that Stamp Duty is classified as a voluntary tax, and hence it is possible to just not pay it.
I imagine that non-payment creates problems trying to register the property in the name of the new owner (probably impossible) and /or when trying to sell. I guess it would only be suitable to cash purchases of properties that are not expected to be resold. The article mentioned something about inheritance tax planning.
Any experts here?
I imagine that non-payment creates problems trying to register the property in the name of the new owner (probably impossible) and /or when trying to sell. I guess it would only be suitable to cash purchases of properties that are not expected to be resold. The article mentioned something about inheritance tax planning.
Any experts here?
sideways sid said:
This is not a statement of fact and I have no idea if there is any truth in it at all, but I read a while ago that Stamp Duty is classified as a voluntary tax, and hence it is possible to just not pay it.
The notion of a voluntary tax is an interesting one. I thought that, pretty much by definition, all taxes are mandatory. The very concept of a _voluntary_ tax is ... peculiar! (So such thing exist?)
Oli.
anonymous said:
[redacted]
In that case you must be an utter B****** to do a seat with if you're telling them to send the TR1 off for stamping given that SDLT is a tax on the consideration, not the document as with good old Stamp Duty.It only took LR 3+ years to change the ole panel 1 though...
Loads of schemes about, whether they are legal is questionable.
Most recent scheme I've heard of works on the basis that a company buying a property with the intention of selling it on (say taking a house in part-ex) can buy the house stamp duty exempt. HMRC's opinion is that once sold on the buyer there would then pay the stamp duty anyway. The scheme works (in short) by setting up a deal where Mr A/company A buys the house, but with a facility to sell on to Mr B/Company B at x price in x many years time. The transaction to Mr A (the solicitor will say) is stamp duty exempt. HMRC have 18 months (I think) to put in a claim if they don't agree, after this time they cannot claim stamp duty from person A. Person B/Company B never take up the option.
The companies/solicitors that offer this 'service' charge huge fees (sometimes half of what the stamp duty would have been). The buyer would need to place the total amount of stamp duty with the solicitor so if within the 18 months HMRC claim the money, it is there for them to pay. The solicitor will also charge a basic fee (often still thousands) whether the SD is claimed by HMRC or not. If HMRC don't claim the SD within 18 months, some of the money is returned to person A and the balance pays the solicitor's 'bonus' payment. IF HMRC were to claim the SD, person A would potentially be worse off as they still pay a higher than usual fee to the solicitor.
Big numbers are at stake, and the solicitors are happy to pay generous fees to introducers (estate agents/mortgage brokers/etc). Usually this service is offered on property values of over £500k, or sometimes only over £1m due to the potential savings available. As I've said, loads of schemes have been banded about, personally, I wouldn't touch them. Just a way for the solicitors to make a fortune with little or no risk to themselves.
Most recent scheme I've heard of works on the basis that a company buying a property with the intention of selling it on (say taking a house in part-ex) can buy the house stamp duty exempt. HMRC's opinion is that once sold on the buyer there would then pay the stamp duty anyway. The scheme works (in short) by setting up a deal where Mr A/company A buys the house, but with a facility to sell on to Mr B/Company B at x price in x many years time. The transaction to Mr A (the solicitor will say) is stamp duty exempt. HMRC have 18 months (I think) to put in a claim if they don't agree, after this time they cannot claim stamp duty from person A. Person B/Company B never take up the option.
The companies/solicitors that offer this 'service' charge huge fees (sometimes half of what the stamp duty would have been). The buyer would need to place the total amount of stamp duty with the solicitor so if within the 18 months HMRC claim the money, it is there for them to pay. The solicitor will also charge a basic fee (often still thousands) whether the SD is claimed by HMRC or not. If HMRC don't claim the SD within 18 months, some of the money is returned to person A and the balance pays the solicitor's 'bonus' payment. IF HMRC were to claim the SD, person A would potentially be worse off as they still pay a higher than usual fee to the solicitor.
Big numbers are at stake, and the solicitors are happy to pay generous fees to introducers (estate agents/mortgage brokers/etc). Usually this service is offered on property values of over £500k, or sometimes only over £1m due to the potential savings available. As I've said, loads of schemes have been banded about, personally, I wouldn't touch them. Just a way for the solicitors to make a fortune with little or no risk to themselves.
Chicken Chaser said:
Are there any plans afoot to extend the current Stamp Duty break for FTB? As I understand it runs out on the 25th March 2012 and will again be on houses above £125000. Would be interested to see whether its been a factor in sales and how much it has cost the government so far.
It has been suggested by the industry that an extension would be really nice. I dont think there's been a reply from HMRC yet, but they must be considering it.ETA apparently not.
said:
FTB stamp duty relief to be scrapped
The government will not continue with the stamp duty tax relief for first time buyers.
While George Osborne did not mention the holiday during his Autumn Statement, the full Treasury document reveals that it will end next year.
The government claims that the relief has been "ineffective in increasing the number of first time buyers entering the market".
The Nationwide Building Society had led calls for George Osborne to maintain the Stamp Duty threshold at £250,000 for first-time buyers.
The statement said: "This relief will therefore end on 24 March 2012 as planned.
"The government is instead prioritising more effective measures which provide better value for money as set out above and in Laying the Foundations: A Housing Strategy for England."
Grenville Turner, chief executive of Countrywide, said: "At a time where deposit affordability remains a significant barrier to not only first time buyers, it is disappointing that the Chancellor did not take the opportunity to extend the stamp duty holiday for first-time buyers and has instead added another barrier for first-time buyers to get onto the property ladder.
"A positive antidote to assist the vast majority of homemovers and the resale market would have been a stamp duty holiday for all homebuyers up to £250,000
“Whilst the measures announced in the government’s housing strategy are a step in the right direction, they only scratch the surface of the fundamental issues that have restricted the housing market in recent years– housing supply and the high level of deposits required.
"The prediction that 100,000 families will benefit from the Mortgage Indemnity Scheme may be optimistic, as were yet to hear the detail of whether it enables lenders to offer cheaper rates."
The government will not continue with the stamp duty tax relief for first time buyers.
While George Osborne did not mention the holiday during his Autumn Statement, the full Treasury document reveals that it will end next year.
The government claims that the relief has been "ineffective in increasing the number of first time buyers entering the market".
The Nationwide Building Society had led calls for George Osborne to maintain the Stamp Duty threshold at £250,000 for first-time buyers.
The statement said: "This relief will therefore end on 24 March 2012 as planned.
"The government is instead prioritising more effective measures which provide better value for money as set out above and in Laying the Foundations: A Housing Strategy for England."
Grenville Turner, chief executive of Countrywide, said: "At a time where deposit affordability remains a significant barrier to not only first time buyers, it is disappointing that the Chancellor did not take the opportunity to extend the stamp duty holiday for first-time buyers and has instead added another barrier for first-time buyers to get onto the property ladder.
"A positive antidote to assist the vast majority of homemovers and the resale market would have been a stamp duty holiday for all homebuyers up to £250,000
“Whilst the measures announced in the government’s housing strategy are a step in the right direction, they only scratch the surface of the fundamental issues that have restricted the housing market in recent years– housing supply and the high level of deposits required.
"The prediction that 100,000 families will benefit from the Mortgage Indemnity Scheme may be optimistic, as were yet to hear the detail of whether it enables lenders to offer cheaper rates."
Edited by scotal on Tuesday 29th November 16:42
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