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Stamp Duty Land Tax – Some Thoughts After 30 September 2021
October 6, 2021

The stamp duty land tax (SDLT) discount on the purchase of residential properties finally came to an end at the end of September 2021. This does not mean, however, that there are no other ways that SDLT can be minimised with some research and careful thought.

What can legally be done to minimise Stamp Duty Land Tax?

By way of example, the off-shore additional charge might not apply if the number of units being purchased is above the level to enable the property to be considered commercial property.  We have had such a case recently where our client was purchasing seven properties in one transaction.

Our client was aware of multiple dwelling relief which might have mitigated the SDLT payable but the issue arose as to whether the off-shore additional charge should be imposed.

We were able to demonstrate successfully that the transaction was to be considered a commercial one so alleviating the need to make the 2% off-shore charge and our client thus made a substantial SDLT saving.

This was not a loophole or a cynical way of avoiding paying the tax but a bona fide analysis to take best advantage of legislation.

We have seen instances where people have tried to put schemes together designed to minimise tax but where the scenarios appear to be sham ones, we advise that it is very easy for the Revenue to see such schemes for what they are and such attempts risk the imposition of large penalties and fines.

At what time in the transaction process should you think about SDLT?

The optimal time to consider stamp duty land tax and how it will impact is at the very start of a transaction when Heads of Terms are agreed and not once contracts have been exchanged. Efforts made to mitigate liability at a late stage prior to completion may not be looked upon favourably by HMRC.

With regard to the fashionable use of multiple dwelling relief to make savings, this can only be properly applied if there really is a separate dwelling or one in the process of being constructed. Simply placing a cooker and a microwave in an upstairs bedroom is not going to create a separate dwelling. 

Details about Stamp Duty Land Tax residential property rates can be found by using this link to the Government’s website:

Stamp Duty Land Tax: Residential property rates – GOV.UK (www.gov.uk)

Contact our Residential Property Solicitors 

If you require any specific advice or assistance about Stamp Duty Land Tax or any of the issues referred to in this blog, or any other related issues, please contact Muscatt Black Graf by telephone on 0207 586 1141 or by email to contact@muscattblackgraf.com, or fill in our online contact form.

This blog was prepared on 6 October 2021. It is not intended to be advice and should not be relied upon as such.

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