The deadline for paying stamp duty land tax (SDLT) is currently 30 days after the effective date of the transaction. This is also the deadline for submitting the land transaction return which reports the SDLT payable.
The effective date of a transaction is generally the completion date. However, this can be an earlier date where the transaction has been “substantially performed”, which would be when the buyer takes possession of the property, or pays a substantial amount of the consideration.
For transactions with an effective date falling on or after 1 March 2019 the due date for payment of the SDLT will be 14 calendar days after the effective date, and the filing deadline for the land transaction return also shifts to that date. Where the contract is contingent or there is an uncertain amount of consideration, the buyer can apply to HMRC to defer the SDLT payable, within 30 days of the effective date.
The deadlines for paying LBTT in Scotland and LTT in Wales will remain at 30 days from the effective date.
When a company purchases a residential property for over £40,000 it must pay the 3% supplementary rate of SDLT. A residential property is defined as one “which is used, or suitable to be used as a dwelling.” Properties which are not residential are taxed as commercial properties.
The FTT recently decided in PN Bewley Ltd v HMRC that a derelict bungalow was not suitable to use as a dwelling, so it could not be defined as a residential property for the purposes of SDLT. HMRC was required to consider the state of the property when it was acquired, not whether it could be renovated to be used as a dwelling at a later date.
This ruling will have also implications for purchases in Wales and Scotland, as LBTT and LTT have similar supplementary rates for purchases of residential properties by companies. However, the additional dwelling supplement (ADS) in Scotland increased from 3% to 4% on 25 January 2019 (see our newsletter on 20 December 2018).
Written by the Tax Advice Network