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Stamp Duty Land Tax rules have changed

Effective 1 March 2019, the payment window for Stamp Duty Land Tax (SDLT) has been halved. SDLT must now be settled within 14 days of the sale instead of 30.

This change affects all land and property transactions, whether commercial or residential.

A completed Stamp Duty Land Tax return must also be submitted within 14 days of the ‘effective date’ of the transaction. Even if no tax is due, a return must be filed.

 

Stamp Duty Land Tax penalty system

 
The current penalty regime for late filings and payments will remain in place.

Defaulters will have to pay an automatic fixed penalty for failure to return by the filing date. The penalty is determined by the lateness of the return.

A fixed penalty of £100 applies to returns filed up to three months after the filing date. The penalty then increases to £200 for returns later than three months.

In extreme cases, where a return is submitted a year or more after the deadline, HMRC will also charge a tax-based penalty. This penalty can be equal to the full amount of the tax that is due.

For the purposes of filing a return, the ‘effective date’ is typically the date that the transfer is completed. However, it can also be the date that the contract is ‘substantially performed’, if this is prior to completion.

‘Substantial performance’ applies where one of the following conditions has been met:

• most of the buying price is paid – normally 90%, in cash or something else of economic value;
• the buyer is entitled to possession of the property; and
• the first payment of rent is made.

 

Exceptions to the rule

 
There are a few exceptions to the requirement for an SDLT return. Exceptions include transactions where no money or other payment changed hands; where property has been inherited in a will; and where property has been transferred because of a divorce or civil partnership dissolution.

 

Payment is purchaser’s responsibility

 
Many people use a solicitor or legal conveyancer to act on their behalf during the sale of property. However, it is always the individual purchaser’s responsibility to ensure that payment is made.

Therefore, it is important that those purchasing commercial or residential land and property understand the new Stamp Duty Land Tax rules.

Here at George Hay, our team of property experts are on-hand all year round to ensure that you are always up to date with the latest legislation. We can help homebuyers and investors to understand their current tax liabilities and prepare for changes to property taxation now and in the future; identifying risks and opportunities along the way.

If you’d like to discuss your circumstances with one of our experts call us today on 01480 426500 or email huntingdon@georgehay.co.uk

For more information and further guidance, click here.

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