Stamp Duty - advice

[jaydubya]

So we are about to sign contracts for our plot (only taken 8 months, but that’s a whole other story!)

 

We sold our main residence to fund the purchase back end of last year, and we also own a BTL property. I was under the impression we would be charged standard rate stamp duty because the plot will be a self build we plan to live in (if we were just moving house it would be standard rate). Our solicitor says she spoke with HMRC and they claim I need to pay higher rate stamp duty which is a bit of a shock. 
 

Will make some calls later today but would appreciate any steer if people have been in a similar situation or are in the know. Google seems to give very mixed views.

[Omnibuswoman]

The basic rule is that stamp duty on a second property is the higher rate. I don’t believe HMRC distinguishes between the primary property being BTL or lived in. The rule is: single property owned = lower rate, add another property = higher rate. If you sold your BTL within a certain period of time (I don’t know the exact duration but it is less than 2 years I think) then you can revert to the lower rate on the second property. 
 

[Vijay]

30 minutes ago, Omnibuswoman said:

The basic rule is that stamp duty on a second property is the higher rate. I don’t believe HMRC distinguishes between the primary property being BTL or lived in. The rule is: single property owned = lower rate, add another property = higher rate. If you sold your BTL within a certain period of time (I don’t know the exact duration but it is less than 2 years I think) then you can revert to the lower rate on the second property. 
 

Think you're spot on but 3 years is the time frame to sell it in and claim the extra stamp duty tax back 

Edited May 5, 2022 by Vijay

[bassanclan]

I think you will find that the additional 3% tax is payable if you purchase a second residential property (over £40k). Land doesn't count (unless its already got a house that you are knocking down)

[bassanclan]

Don't take tax advice from a solicitor

[Temp]

https://selfbuildportal.org.uk/vat-and-sdlt/#sdlt

Quote

 

Building plots (or buildings for conversion) where construction has not yet commenced are classed as non-residential property and accordingly the SDLT rate applied is that for non-residential property, unless the land is already in residential use because it forms a dwelling that is to be demolished and replaced in which case the residential property rate of SDLT (LBTT in Scotland and LTT in Wales) will be applied.

 

Rates for non residential property are frequently lower than for residential property so there is less tax to pay, especially on higher value transactions. An additional benefit for those who already own a residential property, i.e. their main home, a buy to let or second home, is that the 3% surcharge for additional residential property levied across the UK is not triggered.

 

 

 

[bassanclan]

47 minutes ago, bassanclan said:

Don't take tax advice from a solicitor

...or someone off the internet...

[jaydubya]

Thanks all, there is so much conflicting advice/information out there. I spoke to a tax specialist yesterday and they were sure I wouldn’t have to pay it since it will replace my main residence. They believe it will fall under residential rules. We will put the case forward to HMRC but I just can’t believe there isn’t a black and white answer to it.

[Roundtuit]

If it's just a bare plot with no construction started, I believe 'non-residential' SDLT rates apply.

[Temp]

5 hours ago, jaydubya said:

Thanks all, there is so much conflicting advice/information out there. I spoke to a tax specialist yesterday and they were sure I wouldn’t have to pay it since it will replace my main residence. They believe it will fall under residential rules. We will put the case forward to HMRC but I just can’t believe there isn’t a black and white answer to it.

 

Why on earth do they think an empty plot of land is liable for residential stamp duty. Refer them to the link I posted above which clearly says its non-residential.

 

It might only be liable for residential stamp and the higher rate if there was already a house on the plot you were going to knock down.

 

[Temp]

See also here..

 

This explains how to save/avoid stamp duty by buying a plot before the builder starts construction. Including the case where she already owns other properties.

 

https://blackstonesolicitorsltd.co.uk/category/commercial-property/stamp-duty-on-land-with-planning-permission/#.YnZfnTbTU1I

 

Quote

If building work has yet to start and the current/past use is non-residential, Sara’s SDLT liability could be as little as £0, giving a potential saving of £25,000. The same figures would apply even if the land is deemed to be for residential use.

Quote

 

What happens if Sara owns another property or the house won’t be her primary residence?

 

If Sara owns other residential dwellings or she doesn’t intend to live in this new build property, the SDLT surcharge rates will apply. In this example, if Sara intended to rent out the house as a buy to let, her SDLT would be £47,500. However, if she pursued Option 2 and no building works had started, the surcharge would not apply despite the fact it was not intended to be her main residence and her SDLT liability would remain £0. In this instance, the SDLT saving would be £47,500.

 

 

 

 

 

Edited May 7, 2022 by Temp