How much SDLT do you pay on Overage? Reply

What is Overage

http://www.propertylawuk.net/propertytransactionsoverage.html

When land is sold, the vendor will normally do his best to sell at the best possible price – indeed, if the vendor is a public sector authority or a charity, he may be obliged to sell at the best possible price. Sometimes, however, the best possible price may only be available at some time in the future, or not at all. The most common example of this is where planning permission may be granted for a more valuable use of the land, but it is by no means certain that the permission will be forthcoming and, in any event, this is unlikely to happen for some time. Similarly, if land is sold for a particular purpose, such as for the development of 50 houses, and the developer in fact manages to build 60, then the land will obviously be more valuable with 60 houses on it rather than the original 50.

HMRC Rules

https://www.gov.uk/guidance/stamp-duty-land-tax-the-amount-used-to-calculate-whats-payable#cc

Payment depending on the outcome of future events

A transaction could include an amount that the buyer will only pay if some future event happens. This is known as the ‘contingent consideration’.

For example, a developer might agree to pay an extra sum, on condition that they get planning permission for redevelopment.

In these cases you pay SDLT on the assumption that the contingency will happen. The buyer can apply to defer payment of SDLT on the contingent amount. But HMRC still charge the tax at the appropriate rate for the total chargeable consideration.

For example, a builder buys a plot for £400,000 and agrees to pay a further £200,000 if he gets planning permission for a new building. He can apply for deferment on SDLT on the conditional £200,000 but will pay SDLT on the initial payment now. The SDLT due on the initial payment will be at 4%, because the total potential payment is above the £500,000 threshold.

Payment depending on uncertain future events

Some transactions may include a later payment which depends on an unknown variable. This is known as the ‘uncertain or unascertained consideration’.

For example, future payments based on the turnover of a business.

In these cases, calculate the SDLT on the basis of a ‘just and reasonable estimate’ of the amount involved. The buyer can apply to defer payment of the uncertain or unascertainable part. Otherwise, make an appropriate adjustment when the amount of consideration is certain.

steve@bicknells.net

 

How many properties do I have for SDLT? Reply

Above is the diagram from Consultation

But what if you own properties in Companies and Partnerships (registered with HMRC with UTR’s)? Does that mean you own multiple properties?

I spoke to the HMRC SDLT Office about this and they said properties owned by other entities are not owned by an individual so shouldn’t count.

Phone

Call HMRC for help with Stamp Duty Land Tax queries.

Telephone:
0300 200 3510

Opening times:

8.30am to 5pm, Monday to Friday

 

We all want to get things right and follow the rules, so if you file an SDLT return you have 12 months to amend it and during that time you can write to HMRC and set out the exact circumstances, so if you have made a mistake it can be corrected.

The address to write to is

BT – Stamp Duty Land Tax
HM Revenue and Customs
BX9 1HD
United Kingdom

steve@bicknells.net

 

 

Home Buyers have saved £657m in SDLT! Reply

One family house for sale

In the 12 months since December 2014 when new SDLT rules came into place home buyers have saved an estimated £657m in Stamp Duty (SDLT).

The Autum Statement 2014 announced the following change to Stamp Duty.

• No stamp duty will be paid on the first £125,000 of a property
• 2% will be paid on the portion up to £250,000
• 5% is paid for the portion up to £925,000
• 10% is paid on the portion up to £1.5m
• 12% is paid on anything above that

HMRC have a handy calculator, here is link

http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

New analysis released by HMRC shows that the benefits of this reform have been felt across the country, with homebuyers saving an estimated total of:

  • £24 million in the North East or £900 for the average house
  • £90 million in the North West or £700 for the average house
  • £74 million in the East Midlands or £500 for the average house
  • £131 million the South West or £4,800 for the average house
  • £38 million in Wales or £800 for the average house

steve@bicknells.net

Will property prices go up because of changes to stamp duty? Reply

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The big news in the Autum Statement was the change to Stamp Duty.

• No stamp duty will be paid on the first £125,000 of a property
• 2% will be paid on the portion up to £250,000
• 5% is paid for the portion up to £925,000
• 10% is paid on the portion up to £1.5m
• 12% is paid on anything above that

HMRC have a handy new calculator, here is link

http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm

There are also more details at https://www.gov.uk/government/publications/rates-and-allowances-stamp-duty-land-tax/rates-and-allowances-stamp-duty-land-tax

98% of all buyers will pay less tax under the new system

Will this lead to big increases in property values?

steve@bicknells.net

How to Issue and Transfer Shares in an SME 4

When you first form a limited company, the formation agent will arrange the issue of the Subscriber Shares.

Following that you can allocate new shares using Form 88(2)

http://www.companieshouse.gov.uk/forms/generalForms/882Revised2005.pdf

Before the Companies Act 2006 companies had authorised share capital so before issuing shares:

  1. Check the Memorandum and Articles
  2. Check any Shareholder agreements

As your company grows, the shareholders may need to transfer shares to new shareholders. To do this you need to:

  • Inform Companies House on the next Annual Return (you can only tell companies house who the shareholders are on an annual return so it could be a while before companies house get to know the the shareholders have changed)
  • Your Bank and Professional Advisers will need information on changes to Shareholders

Your shareholders need to be aware that if they give away shares or make a gain from selling shares they may be liable for Capital Gains Tax, however, they may be entitled to tax relief like the Entrepreneurs Tax Relief and that each year there is an exempt amount of capital gains for individuals.

steve@bicknells.net