Is SDLT charged on AST Agreement/Counterpart?

[catcuddler]

I am letting a house on AST. Have been told that I need to pay duty, otherwise the agreement isn't admissable in court as evidence. Is this right? And LL and T have an agreement each to keep, each signed by the other? So does each copy need stamping? This is the first time I've done this, so pardon my ignorance, but I thought if I worked through the process with as much info as I could digest and then understand why each step was taken, then it would stand me in good stead for the future.... :) And would the tenant normally pay for this or the LL? Thanks

[Raggy]

Nope, stamping is no longer required. Also, each copy of the tenancy agreement should be signed both parties.

[P.Pilcher]

To be technically correct, an AST is not liable to stamp duty provided that the total rent payable over the term of the lease does not exceed £5000. The term is the period for which the lease is granted i.e six months or 1 year e.t.c. I obtained this information from the stamp duty enquiry line some time ago: 0845 6030135 if you have any further queries.

P.P.

[Raggy]

I think that may have been technically correct a couple of years ago.

[Paul_f]

Raggy. Cat Cuddler is quite right about one AST being signed by the landlord & the counterpart by the tenant. Where do you get the idea that both copies have to be signed by both parties? - They don't.

P.Pilcher is in the dark ages about stamp duty as SDLT came into being in December 2003 and the limit is now £60,000 for the value of a residential lease before SDLT becomes payable, and then it's by the TENANT - the landlord does not have to become involved! :rolleyes:

[P.Pilcher]

Well, I can only add that in early January this year I successfully obtained a possession order from my local county court using the accelerated procedure. My 6 month AST at a rental of £415 pcm, one of the documents required to be produced, was not stamped.

P.P.

[Paul_f]

What Wickerman probably means is that if the commencement of the tenancy agreement pre-dates 1 December 2003 then it will still be required to be stamped but bearing in mind that the limit was changed to £5,000 as P.Pilcher has stated in an earlier post. The old rules only apply from February 1997 and before.

The Stevenage agent to which he refers might not be aware of the SDLT which replaced the old rules. You'd be surprised at the number of letting agents who haven't picked up a book on the subject nor consulted the internet [that's easy enough in itself!] and are still in the dark ages about many aspects let alone SD. How they ever get any business beats me sometimes! :rolleyes:

[lawstudent]

I know of another case like Pilcher's - successful accelerated possession proceedings based on an AST agreement that was theoretically liable to stamp duty but which had not been stamped.

Anyway, on what grounds could a court refuse to grant possession in such a case? HA 1988 requires that possession be granted if all the conditions laid down in the act are fulfilled, but nowhere does it stipulate that the lease must be stamped.

:)

[nigeldecosta]

If I rent a flat out for more than £5000 p/a on 6 monthly short-hold agreements then is stamp duty payable?

If so how do I go about paying it?

If I keep the same tenant and don't change the rent then does the agreement have to be re-signed each 6 months and therefore Stamp Duty paid all over again?

[MrWoof]

I have served an S21 on a tenant, she did not leave so I went to court using the accellerated procedure. The tenancy agreement is a standard AST, no problems there but I did not get it stamped by the Inland Revenue. Is this likely to raise any problems? The court have sent me a copy of the 'Notice of Issue' which they have sent to the tenant, giving her 14 days to lodge a defence.

[P.Pilcher]

Almost certainly no stamp duty need be paid on an AST. 0845 6030135 is the number of the stamp duty enquiry line if you want to check.

P.P.

[dazalock]

I dont think the courts are bothered about the TAX implications of the document, just wether it is legal. Anyway, what is the alternative, not to proceed with eviction?, surely not.

On another point, as of last Monday (April 18th) the Inland Revenue and HM Customs & Excise no longer existed, being replaced by HM Revenue & Customs. So who knows who is bothered. :confused:

[MrWoof]

Thanks for the phone number PP, as from 2003 the threshold for notification is £120,000 so for most of us mortals stamp duty is unnecessary.

[oaktree]

If the tenancy commenced before 1 December 2003 it may be advisable to get the agreement stamped to guarantee that the Court will accept it if you are planning to rely on it in Court

Leases will only attract SDLT where the lease value, or NPV, exceeds £60000 pa

[dazalock]

Oaktree dont you mean 6000pa?

Mr Woof, your getting mixed up with stamp duty on purchases and stamp duty on rents paid.

[oaktree]

Oaktree dont you mean 6000pa?

Mr Woof, your getting mixed up with stamp duty on purchases and stamp duty on rents paid.

Nope, I mean £60000 pa or total value of the lease, in fact the Finance Act 2005 raises that threshold even higher in line with the sales threshold of £120k!!
http://www.hmso.gov.uk/acts/acts2005/20050007.htm


Obviously you need to be careful if renting a house to the same person for a number of years as the new tax is cumulative i.e. renting a house for £2k a month for 3 years is going to incur some tax based on the total rental value adjusted for net present value

[MrWoof]

Oaktree, you've lost me there, I phoned the Inland Revenue and they told me that since 2003, only rents of 120k annually attract stamp duty.

[oaktree]

Oaktree, you've lost me there, I phoned the Inland Revenue and they told me that since 2003, only rents of 120k annually attract stamp duty.

On the 1st December 2003 the Finance Act introduced SDLT to replace Stamp Duty, the threshhold was set at £60000 for the total rental value of the lease; that rate has now been increased by the 2005 Act to £120000

The amendment reads: Paragraph 2(3) of Schedule 5 to that Act (amount of stamp duty land tax chargeable: rent), in Table A (bands and percentages for residential property) for "£60,000" in both places substitute "£120,000".

If I'm right in thinking that your rent doesn't add up to that much anyway (if it does can I borrow a few grand?) then you should be ok in any event.

[Andy70]

I'm renting out my flat on a 6 month shorthold tenancy, do I need to pay any stamp duty and get the agreement stamped for legal validity?

[P.Pilcher]

Not normally - I think the annual rental has to exceed £25000 before stamps are needed.

P.P.

[Paul_f]

SDLT is only payable where the total rent for the contract is worth >£125,000 or if the fixed term of the lease exceeds 7 years then it must be registered regardless as to whether any duty is payable. There is also an inflation figure to be factored in but I don't think the detail is required.

[Andy70]

On the frontpage of LandLordZone there is a link for Stamp Duty and that says that if the annual rent is more than 5K then you have to pay, I think its about 1%. Is this outdated?

[jeffrey]

LOOK:
1. Stamp Duty (SD) was abolished many years ago.
2. SD was replaced by Stamp Duty Land Tax (SDLT), with quite different rules.
3. Several LZ members persist in confusing others by still calling it Stamp Duty. Sad to say, even journalists cannot think accurately in this regard.
4. SDLT applies only to a notifiable transaction. So far as concerns a lease/tenancy not at a premium [= purchase price], this excludes one:
a. at no rent; or
b. for < 7yrs., where amount of rent leads to a NET PRESENT VALUE that does not attract SDLT at rate of 1% or more, ignoring any available SDLT relief. To assess this, use the website calculator to determine the NET PRESENT VALUE.
5. Go to http://www.hmrc.gov.uk/so/new-sdlt-calculators.htm, and insert details (amount of rent, term, future rent, etc)

[Andy70]

Thanks Jeffrey. Gave the HMRC Stamp Office (0845-603-0135) a ring and they said that no SDLT was due on an AST if the annual rent was below 125K, order of magnitude more than mine. The rent accumulates if the AST rolls over, but if a new AST is begun the 125K counter is restarted. They mentioned that there had been some changes to the rules in Budget 2008 which are available on-line.

[jeffrey]

Not quite: it's the Net Present Value (not the rent) which determines SDLT liability.