How to Avoid Stamp Duty on Shares
Tax is payable on the purchase of shares in the UK – known as Stamp Duty on paper transactions, and Stamp Duty Reserve Tax (SDRT) on...
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No – Stamp Duty Land Tax (SDLT) is the same in London as in the rest of England and Northern Ireland. Stamp duty rates are charged according to the purchase price or value of the property.
London, with its proportionately higher property prices, has always led to a higher SDLT income for the Treasury than other areas of the country. For this reason, some have argued that the taxation should be lower in order to make the tax more fair across the board.
First-time buyers in London, particularly, suffer from SDLT rates being the same as the rest of the country. Throughout England and Northern Ireland, first-time buyers are exempt from paying SDLT on properties worth no more than £300,000 and pay a reduced SDLT rate on properties costing between £300,001-£500,000. As anyone who is trying to get on the property ladder in the capital knows, there are very few properties that fall into those categories.
Which means London’s first-time buyers are being unfairly penalised – not only are the prices higher, but they are unlikely to get a break on stamp duty taxation.
Other property buyers are also likely to suffer, too. The rates of SDLT go up with the price of the property, so a three-bedroomed flat in London that might cost £600,000 is in a higher tax bracket than an equivalent three bedroomed flat in, say, Colchester or Nottingham – which likely costs considerably less, and falls in a lower tax band.
Not only are Londoners being hit with higher property prices, but they have to pay proportionately more SDLT.
If you are looking for advice or seeking legitimate savings on Stamp Duty Land Tax in London, contact expert SDLT barrister Patrick Cannon here.
As in the rest of England and Northern Ireland, the threshold for SDLT on a London property was altered to help stimulate the property market after Covid 19 hit. Until 30th September 2021, any property costing £250,000 or less is generally exempt from SDLT. From 1st October 2021, the threshold for SDLT exemption goes back down to £125,000.
Needless to say, this stamp duty relief is unlikely to apply to many properties in London.
Second or additional homes in London carry a 3% surcharge on the normal rates of SDLT – just as in the rest of England and Northern Ireland. There are some exemptions and reliefs to the additional home surcharge – including ‘multiple dwelling’ properties (eg those with an annexe) and ‘mixed-use’ properties (eg a flat above a shop, or offices and residential homes within the same property).
If you are a first-time buyer, the threshold for SDLT exemption in England and Northern Ireland is £300,000. There is then a reduced rate of SDLT up to the threshold of £500,000 (5% payable on the amount between £300,001 and £500,000).
London yields proportionately a lot more Stamp Duty tax revenue than other areas of the country.
A working paper produced by the Greater London Authority in January 2017 states that ‘During 2015-16, SDLT raised £3,370 million for residential properties and £1,395 million for non-residential properties in London. This represents 46.7 per cent and 42.7 per cent of the total English yields respectively, meaning that London contributed more stamp duty than any other UK region.’
The highest yielding areas in London are, unsurprisingly, Kensington and Westminster (between them, representing over £1bn of tax revenue – that’s 14% of the total SDLT yield.
If you are planning to buy a property in London, any legitimate savings that you can make on SDLT can represent a large amount of money. For this reason, consulting with a highly experienced SDLT barrister can be hugely beneficial. Property buyers should beware – there are many unscrupulous advisors who claim to help you avoid paying SDLT, which could put you in hot water with HMRC.
Tax barrister Patrick Cannon is one of the UK’s leading experts on Stamp Duty Land Tax. If you are seeking legitimate savings on your London property SDLT, you can rely on him to provide the best advice. He will also manage any HMRC correspondence, investigations or represent you in court to ensure minimal financial or reputational damage in cases of SDLT avoidance or evasion.
For more information about how Patrick Cannon can help advise you on Stamp Duty in London, contact him here.