Don’t get tripped up by complex stamp duty rules
Stamp duty has been around since 1694, but it only comes to the fore when we or someone else needs to pay it. Fail to cough up the right amount, and it can grab headlines and ruin careers – as Angela Rayner discovered.
Following her resignation as Deputy Prime Minister and housing secretary, Steve Reed has picked up the housing baton for the government, which includes overseeing the building of 1.5 million new homes during the current Parliament.
Anyone buying a new home or property needs to make sure they understand the stamp duty rules, which are based on a range of different thresholds, bands and conditions. Here are some dos and don’ts to help you stay the right side of the law when it comes to both the Stamp Duty Land Tax (SDLT) and Land Transaction Tax (LTT).
- Do share accurate information
Conveyancers and solicitors can’t independently verify your personal circumstances or tax status. They rely on the details that you give them. It’s therefore essential that you provide all the relevant information – and check it’s correct. If you fail to make an accurate SDLT or LTT declaration, HMRC could apply interest to any additional payments and impose financial penalties. You could also be the subject of an investigation or audit, which can be costly and time-consuming.
- Don’t blame your conveyancer
SDLT and LTT rules are complicated, which is why there’s speculation that the tax might be reformed or replaced by the government. You can read more about this in another Attwaters blog. Conveyancers and solicitors helping with the purchase of a property or a piece of land have to abide by these rules. They will use a recognised method, such as an HMRC calculator, to work out how much tax is due – there’s no flexibility.
- Do read your engagement letter
Conveyancing firms will normally issue an engagement letter when you instruct them to oversee a property or land purchase. Reading the small print might not be top of your priority list when there’s so much else to do, but it’s important you understand the role of a conveyancer. The letter will explain their responsibilities – and yours. It will also highlight when you might need to take specialist tax advice.
- Don’t underestimate the complexities
As Angela Rayner found out to her cost, it can be difficult to navigate the web of SDLT rules – even when you take professional advice. Trusts, multiple residences and ‘deeming rules’ can all impact how much stamp duty is payable. There are also various reliefs and exemptions that could be applicable. Taking the time to explore the different rules for SDLT or LTT will help you make informed decisions and avoid any nasty surprises.
- Do seek specialist advice
Most conveyancers and accountants won’t be able to give advice on complex SDLT or LTT circumstances and liabilities. It requires specialist tax knowledge. SDLT and LTT are self-assessed taxes and that means you are personally accountable for any mistakes. A conveyancer cannot be held liable for any additional tax, interest or penalties you may incur if you do not obtain specialist advice.
If you are planning a property or land purchase, then Attwaters can recommend trusted SDLT and LTT experts. Get in touch with our residential property team on 0330 221 8855 and enquiries@attwaters.co.uk to find out more.
