When going through the information about Stamp Duty Land Tax (SDLT), people normally relate this tax to buying of a property. However, SDLT can also apply where there is a transfer of land or property ownership as well. The rules and standard of liabilities covering transfer are quite different and depend on aspects like joint tenancy, marital status of the parties, or the gifts.

If you need clarity on this subject, then TVR Accountants is here to help. In this blog, Not Just About Tax, we thought it appropriate to explain everything there is to know about SDLT on property and land transfer.

Do You Pay SDLT on Property Transfers?

If ownership of any valuable asset such as land or property is transferred and one gives something of value in exchange for it including; cash, goods, services, Client assumes debt then an SDLT will be charged. These are payment or liability that are chargeable considerations through which SDLT becomes payable or non payable.

What is Chargeable Consideration?

Most property transactions include cash, but additional forms exist with chargeable consideration. For example, if you:

Transfer property in exchange for goods or services.

Take over the payment of an excellent amount of financing on the property.

SDLT applies depending on the value of the chargeable consideration that is stated below: Where the consideration is over the current SDLT rate then a tax is charged.

Scenarios Involving SDLT

• Gifting Property

If a property or land is being transferred by way of a deed of gift and there is no outstanding mortgage or chargeable consideration then SDLT is not payable on it by the recipient. The giver also has no charge of SDLT simply because money is not being transferred in this scenario.

Property Transfers Between Spouses or Civil Partners

When moving in, getting married, or entering a civil partnership: SDLT is paid where the chargeable consideration is more than the current ceiling.

• Gifting property between partners: If it is a gift there is no SDLT.

• During divorce or separation: Specifically, disposals which occur via court order in the course of a divorce or separation are outside the scope of SDLT even if the value exceeds the above stated threshold.

Joint Ownership Transfers

In the case of part disposal where one or more of the joint owners assigns the whole of his share to another, SDLT is chargeable where the remainder owner pays for any consideration for example cash or taking up a mortgage.

SDLT is not payable where there is an assignment of a lease gross or if the property is transferred by way of gift whereby no consideration is paid.

Transferring Property to a Limited Company

Where property is being transferred into a company SDLT may be charged according to the market value of the property where for instance the transferor is connected to the company. For instance when property with stamp duty land tax value of £500, 000 has been transferred and charged on an SDLT value of £250, 000 then SDLT will be relieved based on £500, 000.

Inheriting Property

Receipts of land, or any other property, are free from SDLT irrespective of the consideration or amount of any mortgage remaining on the property. This exemption is allowed so far as is necessary to provide no chargeable consideration is being offered by the beneficiary.

Transferring Equity Within the SDLT Threshold

If the chargeable consideration for transferring equity (for example a mortgage) is within the £250,000 bracket or below nothing is paid in SDLT.

Avoiding SDLT When Transferring Property

There are limited circumstances where SDLT is not payable:

• Where the property is passed as a gift, and is without any cash, debt or other burdensome consideration.
• When the property goes under the will and for no consideration other than that offered by will.

Where transfers are made amongst family members the SDLT liability in relation to any particular transfer will depend accordingly on the relationship between the parties or the nature of the transfer. For instance, gifting property to the children would be subjected to SDLT where there is conveyance that has chargeable consideration exceeding the prescribed ceiling.

Tax Considerations Beyond SDLT

When transferring property it is also necessary to consider other taxes including CGT and IHT when doing the business. They can altogether raise the cost of transfer to a considerable level depending on the details of the implementation.

Expert Advice from TVR Accountants

There can be many issues related to different means of transfer, including the role of SDLT, which plays a part in the process. At TVR Accountants, we provide assistance in such problems for individuals or business entities so as to obey guidelines and optimize recovery of taxes.

If you require a specific update or need help or advice regarding SDLT, property transfers or any other tax issue please, call us on 01284332375 or email us at info@taxvatreturn.co.uk.  Contact us today to get the best information on how you can have a smooth transfer of property.