| Stamp
Duty on Property Purchases
The main rates of stamp
duty (Stamp Duty Land Tax from December 2003) on property sales remain unchanged in the
2003 budget at:
Residential Property:
| Property
Value |
|
Duty
Payable |
| £0 to |
60,000 |
0% |
| £60,001 to |
£250,000 |
1% |
| £250,001 to |
£500,000 |
3% |
| £500,001 |
or more |
4% |
Stamp duty on property transactions is to be replaced
by a new tax in December 2003. This will known as Stamp
Duty Land Tax
(SDLT).
Finance
Act 2003
-
Inland Revenue Press Release
The
duties will remain exactly the same as at present,
but some of the loopholes, where owners and buyers
have been able to avoid some duty by such measures
as inflating the values of fixtures and fittings,
will be closed.
The
onus is on you, or your solicitor
inform the Inland
Revenue on completion of a purchase, file the proper
paperwork, calculate how much SDLT is due and pay it
within 30 days. Interest is payable on late
payments.
The
Inland Revenue will have the power to reclassify
fixtures and fittings values where fraud is
suspected, and heavy fines and penalties will ensue.
Current
Rates are:
|
TABLE
A: RESIDENTIAL
|
|
Relevant consideration
|
Percentage
|
|
Not more than £60,000
|
0%
|
|
More than £60,000 but not more than
£250,000
|
1%
|
|
More than £250,000 but not more than
£500,000
|
3%
|
|
More than £500,000
|
4%
|
Commercial Property:
|
|
|
|
TABLE
B: NON-RESIDENTIAL
OR MIXED
|
|
Relevant consideration
|
Percentage
|
|
Not more than £150,000
|
0%
|
|
More than £150,000 but not more than
£250,000
|
1%
|
|
More than £250,000 but not more than
£500,000
|
3%
|
|
More than £500,000
|
4%
|
|
Current
Rates apply to most property transactions, apart
from some given special status if the property is
located in what is known as a disadvantaged area or
where other special reliefs apply - see Finance
Act 2003
Disadvantaged
Area Relief 
Certain areas have been given disadvantaged
status in the Chancellor's 2002 pre-budget
report. The relief applies to properties in over
2000 areas in the UK and will save 1% on the
purchase price of homes up to £150,000.
Commercial property purchases
have also become more attractive in disadvantaged
areas because the £150,000 limit has been abolished
altogether.
The Flats
Over Shops Conversion scheme also incorporates
several tax concessions including stamp duty.
Buying in
"disadvantaged" areas can be a good
strategy for investor landlords. Buying on the
periphery of more affluent areas can often have a "spill-over"
effect, and gradual improvements over time can
substantially increase the value of an investment.
Thorough research is needed here.
Disadvantaged
Areas
To find out if a property is
in one of the Disadvantaged
Areas you need to find the Post
Code. The areas are listed on the Inland Revenue
site in pdf files.
Stamp
Duty on Long Leases
See the Inland
Revenue information
Stamp
Duty on Lettings
This is a tax on
documents administered through Inland Revenue Stamp
Offices of which there are several throughout the
UK.
As far as residential
short-lettings is concerned this has generally been
a voluntary tax. Technically, an unstamped document
is inadmissible in a court of law but judges have
usually been sympathetic to landlords and tenants
producing unstamped documents as evidence in
disputes.
However, there is no
saying that this will continue and in fact there is
an indication that courts may not accept
unstamped documents in the future. The Inland
Revenue will also charge penalties for these
unstamped documents.
The good news for
most landlords is that the threshold for stamp duty
on residential lettings is an
annual rent of £5,000.
If the annual
rental is below £5,000 then no duty is now payable.
Tenancies in excess
of £5,000 pa attract stamp duty
liabilities on the agreements - both tenant's and
landlord's copies for which there will be a fixed
£5 duty.
Failure to pay
these duties within 30 days will result in penalty
charges becoming due.
See Inland
Revenue Stamp Duty Rates for full details |
