Stamp Duty on VAT?
Discussion
Confused ,
as far as I know or at least thought, Stamp Duty is only payable on the net price ( pre vat) of a commercial property. Is this right? The reaosn I ask is that the VAT element takes us over the 500k mark and therefore from 3% to 4%.
Can I confirm that if we are paying 460k + Vat , the stamp duty should therefore be 13800? and not 21620!
My solicitor isn't sure ( which is scary) and the accountant is on holiday.
as far as I know or at least thought, Stamp Duty is only payable on the net price ( pre vat) of a commercial property. Is this right? The reaosn I ask is that the VAT element takes us over the 500k mark and therefore from 3% to 4%.
Can I confirm that if we are paying 460k + Vat , the stamp duty should therefore be 13800? and not 21620!
My solicitor isn't sure ( which is scary) and the accountant is on holiday.
Assuming a purchase, you do need to include the VAT (bummer!)
See: www.hmrc.gov.uk/so/sdlt6.pdf page 18
For a lease, if the landlord charges VAT in the rent then this must be taken into account when calculating the NPV figure for the lease (on which SDLT is payable). Similarly, if you pay a premium for granting of the lease, any VAT charged is included in the figure for SDLT calculation.
See: www.hmrc.gov.uk/so/sdlt6.pdf page 18
For a lease, if the landlord charges VAT in the rent then this must be taken into account when calculating the NPV figure for the lease (on which SDLT is payable). Similarly, if you pay a premium for granting of the lease, any VAT charged is included in the figure for SDLT calculation.
Ah, so its basically a leasehold purchase rather than a 'normal' lease where you pay rent? Bit like buying a flat.
Yep - unfortunately it seems you have to pay tax on the tax and the sums involved mean you get hit with the double-whammy of 4% SDLT rate. Nice.
Cheeky buggers, aren't they? That effectively puts the cut-off for 4% SDLT down to £425k from £500k for commercial property. They really do like to get as big a slice of pie as they possibly can, don't they?
Yep - unfortunately it seems you have to pay tax on the tax and the sums involved mean you get hit with the double-whammy of 4% SDLT rate. Nice.
Cheeky buggers, aren't they? That effectively puts the cut-off for 4% SDLT down to £425k from £500k for commercial property. They really do like to get as big a slice of pie as they possibly can, don't they?
£32,900 in tax! Just for the privilege of moving... 
Obiwonkeyblokey said:
Confused ,
as far as I know or at least thought, Stamp Duty is only payable on the net price ( pre vat) of a commercial property. Is this right? The reaosn I ask is that the VAT element takes us over the 500k mark and therefore from 3% to 4%.
Can I confirm that if we are paying 460k + Vat , the stamp duty should therefore be 13800? and not 21620!
My solicitor isn't sure ( which is scary) and the accountant is on holiday.
as far as I know or at least thought, Stamp Duty is only payable on the net price ( pre vat) of a commercial property. Is this right? The reaosn I ask is that the VAT element takes us over the 500k mark and therefore from 3% to 4%.
Can I confirm that if we are paying 460k + Vat , the stamp duty should therefore be 13800? and not 21620!
My solicitor isn't sure ( which is scary) and the accountant is on holiday.
In answer to the original question, you'll need to paying £21620 in Stamp Duty. And by the way, get a decent lawyer.
It's an abomination but absolutely correct - pay the VAT and then pay the SDLT on top, even if you can claim the VAT back
The really daft thing is that for a purchase (freehold or long lease) we have a series of SDLT saving schemes that will knock the overall cost back to about 1% but the cost of implementing the scheme means it is only viable if the value is over £1m
So the 4% band really only hits the £500k to £1m bracket and over that you can actually pay LESS duty
This chancellor couldn't add up if his life, or ours, depended on it
The really daft thing is that for a purchase (freehold or long lease) we have a series of SDLT saving schemes that will knock the overall cost back to about 1% but the cost of implementing the scheme means it is only viable if the value is over £1m
So the 4% band really only hits the £500k to £1m bracket and over that you can actually pay LESS duty
This chancellor couldn't add up if his life, or ours, depended on it
we are just looking at buying a £245k business property on a 999 year lease. I would assume that that price they quote is ex VAT (I have asked the agent, but an awaiting a reply). If it is, does that mean I then have to find £42,875 to pay the VAt, which I can then claim back? Would the stamp duty be 3% in this case as well?
dcw@pr said:
we are just looking at buying a £245k business property on a 999 year lease. I would assume that that price they quote is ex VAT (I have asked the agent, but an awaiting a reply). If it is, does that mean I then have to find £42,875 to pay the VAt, which I can then claim back? Would the stamp duty be 3% in this case as well?
£245k seems suspiciously close to the £250k boundary, so maybe it does include VAT...
If not, yes you will have to find ~£43k for the VAT man and another ~£8½k for the SDLT.
pdV6 said:
dcw@pr said:
we are just looking at buying a £245k business property on a 999 year lease. I would assume that that price they quote is ex VAT (I have asked the agent, but an awaiting a reply). If it is, does that mean I then have to find £42,875 to pay the VAt, which I can then claim back? Would the stamp duty be 3% in this case as well?
£245k seems suspiciously close to the £250k boundary, so maybe it does include VAT...
If not, yes you will have to find ~£43k for the VAT man and another ~£8½k for the SDLT.
that causes a bit of a problem - we don't have that sort of cash lying around (aside from the deposit, but obviosuly that can't be used), do people get loans for the VAT in situations like this? Should the VAT be added onto the mortgage, then paid back as soon as it is reclaimed?
Edited by dcw@pr on Wednesday 9th August 18:42
Our Property Agent said:
If you pay the VAT on the purchase price then yes you are eligable for stamp duty on the whole however as a VAT registered company you can elect with the VAT office not to pay the VAT ( i.e you would have paid it and claimed the full amount back anyway) ,you need to request a certificate of exemption via your accountant prior to exchange otherwise this will not be valid.
My accountant, and our lawyers have never heard of it either, however
the plot thickens!
Agent said:
Just spoken to the solicitor again who says he's had clients who have done this a number of times, he's pulling up the files and will come back to me as to how exactly this is acheived.
the plot thickens!
Gassing Station | Business | Top of Page | What's New | My Stuff