Avoid Stamp Duty

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Stamp Duty Changes - Budget 2012

21 March 2012

George Osbourne has highlighted a number of changes to the Stamp Duty tax.

The main changes we have seen in the media are:

• 7% tax band on properties over £2m
• 15% tax on properties bought through a company

There are of course a series of technical changes that have been made which we are currently looking into. We aim to have a response to the budget changes once we have had time to look over these changes.

In the meantime we are still open for business, so if you would like to speak with an adviser please complete our online form.

Using Chattels to Avoid SDLT

29 August 2011

Different techniques can be used to reduce or eliminate Stamp Duty. Today we are going to talk about chattels and explain how they can be efficiently used as part of a Stamp Duty Mitigation strategy. Chattels are tangible assets, for example furniture, which are not strictly speaking part of the property, but which are included in the transaction between a property seller and a buyer.

Chattels are typically included in the purchase contract, but they can be treated in different ways. They can appear as being part of the sale, they can be omitted, or they can be listed to be purchased by the buyer separately from the property at an agreed price. The way chattels are treated as part of the contract is listed in a fixtures, fittings and content form which are included with the contract.

Before we explain how chattels can be used for Stamp Duty mitigation, it can be useful to remind us what the Stamp Duty rates are. For a property up to £125,000, no Stamp Duty is payable. Between £125,000 and £250,000 the rate is 1%, for properties between £250,000 and £500,000 the rate is 3%, over £500,000 and less than £1,000,000 is 4%, over one million this rises to 5%.

It is important to remember that Stamp Duty Land Tax is payable for land transactions and it does not apply to personal property such as chattels. Very often when a property is bought, chattels are included in the price. Most of the time, this approach has no impact on the Stamp Duty payable by the buyer. But in some cases, failure to list the chattels as such in the contract can have a major impact on the Stamp Duty amount.

Let's have a look at an example.

John wants to buy a property for £126,000. The property includes include chattels valued at £2,000. Listing the chattels in the contract means that the property price is £124,000, with an additional £2,000 for the chattels as a separate purchase. Because the property price is below the £125,000 threshold no Stamp Duty is due on the transaction. Not listing the chattels would have resulted in a property price of £126,000 on which £1,260 is due in Stamp Duty.

The example above illustrates how chattels can be used to eliminate the Stamp Duty on a £126,000 transaction. Some rules and tests exist to determine what exactly constitute a chattel, but a lot has to do with common sense. If it is an item that would be removed from the property by the seller, it probably qualifies as a chattel. Some items are border line, a typical example being central heating.

Understanding how to handle chattels is just one of the many Stamp Duty Mitigation strategies that can be implemented. If you are buying a property over £250,000 it is important that you talk to a tax planning expert to understand what can be done to avoid stamp duty.

How to legally avoid Stamp Duty

27 August 2011

Many people dread the need to pay stamp duty when purchasing new property. Stamp duty is an obligatory tax which comes attached with the purchase of property or land in the UK and is calculated as a percentage of the price. The usual stamp duty rates differ, beginning from 1% for properties priced around the £125,000 range and up to 3% for properties which are priced at £250,000 and above. As of April 2011, properties which are priced at £500,000 or above have a stamp duty rate of 4% while properties above £1 million are set at 5%. The increase in rate was implemented to help cover the exemption of stamp duty for first-time buyers.

Take a look at a few legal ways to avoid SDLT:

Look for Right to Buy Schemes.

Right to buy schemes are programs where the purchaser is offered a discount to purchase a property that they had rented out from a public sector body. Properties and houses that are being offered under the right to buy scheme are entitled to be exempt from stamp duty. Properties and houses under the right to buy schemes are often offered with attractive prices with huge discounts. Example of a public sector body would be your local housing authority.

Stamp Duty Mitigation.

This won't help you avoid stamp duty 100%, however it helps to alleviate the burden as well as make some significant savings. Stamp duty mitigation is a service often offered by tax planners and accountants who use their knowledge of the tax system to help lessen the payable stamp duty. This method is completely legal, helping you save thousands and thousands on your tax bill when making a home purchase.

Carbon Neutral Homes.

Carbon neutral homes are environmental friendly homes, and the UK government is doing all they can in their power to encourage people to purchase these types of home. Among their efforts they are offering cash incentives in the form of reduced stamp duty - in the case of a completely carbon neutral home the stamp duty is no longer payable. If you purchase homes which are 100% certified to be carbon free, and priced below £500,000, you will be excused from needing to pay for stamp duty. However, the carbon neutral homes need to be certified by an authorized assessor recognized by the government.

Stamp Duty. What is it? Are there ways it can be avoided?

26 August 2011

There are so many unknown factors to consider when you're purchasing property. One such factor is the stamp duty, which is a tax on any land or property purchase in the UK. This tax has been around in some form or fashion for the last 100 years.

However, it's not until the last few years that it's gained some attention. The reason it's had so much attention in recent years is the sum of money that it costs. After all, you're paying a good deal of money for a home or investment property, only to learn that you must pay even more money to the government just to stamp it. How fair is that? We don't think it's very fair.

In the past, the stamp payment was considered a tax, paid to a person's local government for putting a literal, physical stamp on transfer papers. The amount paid in the past was nothing compared to the amount of money being handed over today. It's the biggest reason property buyers are looking to avoid SDLT whenever they can.

Most people naturally assume that the stamp fee is just one part of house buying. They believe it's the one thing they're not able to get away with not paying. There is some good news though. Due to some very complex stamp duty payment laws, there are some noteworthy loopholes people can use to their advantage to help them to avoid stamp duty.

With the help of a tax adviser experienced in stamp duty mitigation, you can purchase property without ever paying the fee. And, if push comes to shove and you still have to pay it, the company can help you to pay as little as possible.

Several of the loopholes are quite big so it's important to know them to save yourself some cash. Two very large loopholes include:

Being a first-time home buyer. The definition of who qualifies as a first-time home buyer has expanded significantly to include many households. This means you could avoid paying a stamp duty.

Placement of property in a first-time home buyer's name. This can help you save a bit of money on this area of the transaction. For example: you are not married but are living with someone. You've purchased property in the past but your significant other has not. Placing the home in his/her name will help you avoid stamp duty.

If you wonder how you're going to avoid SDLT, it would be in your best interest to speak with a stamp duty mitigation business that knows the laws, understands them and can tell you the best way to obtain the piece of property you want without having to pay an arm and a leg for it.

Yes, you will need to pay the stamp duty mitigation business for their consultation, but think about the money you'll be saving. Those things will pay for themselves in the long run. With present-day property prices the way they are, especially in the urban regions, you're probably looking for all kinds of ways to save money. Avoiding stamp duty payments is certainly one area of buying a home where you can save yourself a significant amount of cash.

SDLT Mitigation Techniques

25 August 2011

If you are looking to purchase land or property in the United Kingdom, you will benefit in learning about stamp duty mitigation and how it can help you lower the amount of tax you have to pay. If you purchase land or property over £250,000, the government requires that you pay a stamp duty tax as a percentage of the total cost of the transaction. The Stamp Duty amount to pay is a percentage of the price, with different rates for different price bands. This may amount to a large sum of money and many new homeowners are unfortunately not prepared for this cost. Before making an offer it is probably a good idea to consult a stamp duty mitigation specialist.

Reducing or avoiding stamp duty is called stamp duty mitigation, and it can save you a great deal of money when purchasing a house or other property. Generally speaking, the stamp duty cannot be included as part of the mortgage and it must be paid at the time of closing. As many people do not have that much cash available, learning to avoid stamp duty is often their best (and possibly only) option to eliminate or reduce the stamp duty on their new property.

There are several ways you can avoid SDLT. Here are a couple of techniques a SDLT mitigation expert might recommend:

First Time Home Buyers. Stamp duty mitigation is also generally possible for first time homeowners. If you or your spouse is a first time home buyer, you can generally reduce your stamp duty significantly.

Redevelopment Zones. Purchasing a house or other property in a redevelopment zone can help avoiding SDLT or at the very least reduce the amount of your payment. Redevelopment areas can be found in most cities and towns in the UK.

Consult an Expert. A stamp duty mitigation specialist can provide you with a complete report on each of the exceptions and discounts you may be eligible to receive.

Eco-friendly Houses. Currently once of the most popular ways for avoiding stamp duty is to qualify the residence as a "green house." Properties which can be proven to be self-sustaining when it comes to energy usage for at least a year are generally exempt from all stamp duty fees.

Low Price Range. Another common way to avoid stamp duty is to purchase a lower price home. Stamp duty is based upon certain levels and buying a home just below one of the thresholds (rather than just above one) can help you with reducing or avoiding stamp duty.

Laws regarding stamp duty mitigation have evolved substantially in the last few years, particularly after 2008. It is very important that you're well prepared and knowledgeable about stamp duty and particularly the stamp duty mitigation options before you make an offer. Find out more about avoiding stamp duty today in order to ensure that you pay the lowest possible price on your new home or property.

The Various Costs Involved When Buying A Property

22 August 2011

When buying a property many people fail to understand the costs involved. In addition to the mortgage loan there are many other costs a house buyer needs to cover. In this short article we'll try to explain what these are and how one of them, Stamp Duty, can be avoided.

There are at least two additional costs for setting up a mortgage. The first one is the 'arrangement fee' which is a fixed mortgage application fee. The other one is the 'basic valuation' which can upwards of £100.

The next activity is the survey, either the Homebuyer's report or the Building Survey. Depending on the type of survey, the cost can be anything between £250 and £1000. Then comes the legal and conveyancing fees. The price varies greatly from one firm to the other. The fee structure can either be fixed price or based on a percentage of the property price which can be up to 0.5%.

The Land Registry fee is based on the property price and is between £40 and £800. If buying a property using an estate agent, then you (or the seller) will need to cover the estate agent fee, which can be up to 2% of the property price.

When moving to the new property, removal fees can be significant. Even if you decide not to use a removal firm, you will need to cover the hire of a van. When finally settled in your new property, additional costs will be involved. Things such as decorating, insurance, setting up services with energy suppliers, mail redirection all cost money.

And finally there is Stamp Duty. Stamp Duty alone can be higher than all the other additional costs listed above. The amount to pay for Stamp Duty is based on a percentage of the property price, with different rates applicable at different thresholds.

The good news is that Stamp Duty can be completely avoided on purchases of £250,000 or more. The process, known as 'Stamp Duty Mitigation', uses various tax planning procedures to reduce or completely avoid Stamp Duty. The service is offered by some solicitors but many people are unaware of it. The fees for this service are typically based on a percentage of the Stamp Duty saved, usually half the amount.

For a property over one million pounds, the savings can reach over £25,000 so the procedure is definitely worth it. If you're in the process of buying a property over £250,000, we would highly recommend that you speak to a stamp duty expert now.

How To Save Money On Stamp Duty

20 August 2011

Buying a property these days in the UK has become very hard and keeps getting harder. Despite the current economic recession, house prices still remain very high - many house buyers struggle to get a mortgage to finally get on the property ladder. In addition to the mortgage loan, there is a significant cost many buyers do not take into account, the cost of Stamp Duty. Stamp Duty Land Tax (SDLT) is a percentage tax on every purchase of land or property in England and Wales. The Stamp Duty amount is based on a percentage of the property price. Different percentages apply at different property price levels - 3% for properties between £250,000 and £500,000, 4% for properties between £500,000 and £1,000,000, and 5% for properties over £1,000,000.

The good news is that there are ways to avoid Stamp Duty. The process is called Stamp Duty Mitigation and is offered by various tax planning experts in the UK. SDLT mitigation uses different tax planning techniques to reduce or completely eliminate the Stamp Duty liability, saving you thousands of pounds in the process.

Stamp Duty can also be avoided for new properties with zero carbon emission. This Stamp Duty exemption has been introduced by the government in 2007 as part of a series of measures to promote eco-friendly homes in the UK. Other Stamp Duty exemption techniques exist and a tax planning expert will be able to guide you to find the best strategy for your purchase.

Companies offering such tax advice services typically charge their customer a fee based on the amount of Stamp Duty saved. The fee will vary with every company but generally speaking will represent around half the amount of stamp duty saved. Some companies also charge a fixed fee (typically several thousand pounds) in addition to a percentage on the Stamp Duty savings. Many companies also offer insurance and guarantees that the scheme they implement is financially sound and totally legal.

Because Stamp Duty rates increase with the property value, Stamp Duty mitigation is especially worth considering for properties above £500,000. On a property worth £1,000,000, Stamp Duty mitigation could save the buyer over £25,000! This strategy is also worth considering for less expensive properties, starting at £250,001, but the potential savings are much lower, typically a couple of thousand pounds.

A Stamp Duty Mitigation expert will take the time to assess your situation and recommend the best techniques to help you avoid paying an expensive tax. Speak to an adviser now and save thousands of pounds in Stamp Duty on your next property purchase.

Stamp Duty Rates

18 August 2011

Stamp Duty Land Tax (SDLT) or simply Stamp Duty is a tax on land and property transactions in the UK. SDLT is paid by the buyer and the amount to pay depends on the property price. Different rates apply depending on the type and value of the property. Full details on the various rates are available on the HMRC web site, but let's have a look at residential properties as an example.

For residential buyers, no SDLT is due for properties up to £125,000 in value. For properties between £125,000 and £250,000 the SDLT rate is 1%, 3% for properties between £250,000 and £500,000, 4% for properties between £500,000 and £1,000,000, and 5% for properties above £1,000,000. For first time buyer, the rates above apply except that no SDLT is due for properties up to £250,000.

What does it mean in practice? For a £2,000,000 property, the SDLT due is £100,000. For a £750,000, the amount would be £30,000. The good news is that there are ways to avoid Stamp Duty through specialist tax planning technique. The process is called Stamp Duty Mitigation.

Stamp Duty Mitigation is implemented by a tax adviser who will usually charge a fee based on the Stamp Duty saved. The fees will vary based on the Stamp Duty amount and the property value but as a general rule it is roughly equal to 50% of the Stamp Duty saved.

Taking a £2,000,000 property as an example, Stamp Duty Mitigation could save the buyer over £50,000. Stamp Duty Mitigation can happen at any time during the purchasing process and it does not affect the overall buying time scales. Unfortunately many buyers are not aware of the process and end up paying a huge Stamp Duty bill that could have been reduced significantly using such a technique.

Please visit the HMRC government site for the latest Stamp duty rates. General advice on SDLT and how to avoid Stamp Duty can also be found on this site.

Stamp Duty Mitigation Fees - How much does SDLT cost?

15 August 2011

Stamp Duty Mitigation is a tax planning process used to reduce or eliminate the Stamp Duty liability on the purchase of UK land or property.

The service is offered by several companies throughout the UK. Each company has their own pricing structure, but generally the fees are roughly equal to half the amount of Stamp Duty saved.

Let's take a couple of examples to illustrate this point:

Customer A is about to buy a property worth £1,000,000. The Stamp Duty due for such a property is 5% of the purchase price or £50,000. A Stamp Duty Mitigation expert can undertake the necessary work to eliminate this Stamp Duty. The fees are likely to be around £25,000, half the Stamp Duty saved.

Customer B is buying a property worth £750,000. The Stamp Duty in that case is 4% of the purchase price, which is equal to £30,000. The Stamp Duty Mitigation fees in that scenario would be around £15,000.

Some companies charge a fixed fee in addition to a percentage of the Stamp Duty saved. When a fixed fee is used, the percentage part is usually reduced. A fixed fee pricing structure greatly reduces the potential Stamp Duty savings for less expensive properties.

For example, let's consider two Stamp Duty Mitigation companies:

Company A charges £4,000 and 30% of the Stamp Duty saved. Company B charges no fixed fee and 50% of the Stamp Duty Saved.

Customer C is buying a property worth £300,000. The Stamp Duty rate for this purchase is 3% which gives an amount of £9,000. For their Stamp Duty Mitigation service, Company A would charge £4,000 plus 30% of £9,000 which is equal to £6,700. Company B would charge no fixed fee and 50% of £9,000 which is £4,500. Using Company B would save the customer an additional £2,200 compared to Company A. This illustrates the point that fixed fees are not generally a good option for lower property prices.

Customer D is buying a property worth £1,000,000 where the Stamp Duty due is £50,000. For their Stamp Duty Mitigation service, Company A would charge £4,000 plus 30% of £50,000 which is equal to £19,000. Company B would charge no fixed fee and 50% of £50,000 which is equal to £25,000. Using a fixed fee structure with Company A would save the customer an additional £6,000 compared to Company B. This shows that for higher property, using a fixed fee with a reduced rate on the percentage based fee can be a good idea.

Every case is different, and it's important that you speak to a Stamp Duty Mitigation expert to understand how you could avoid stamp duty and save thousands of pounds. Make sure that you are clear about the fees!

Avoid Stamp Duty With The Zero Carbon Exemption

12 August 2011

There are several techniques to avoid stamp duty that can be used as part of the property purchasing process. One of them is to take advantage of the existing legislation around carbon neutral homes. Until September 30th 2012, all carbon free homes with a value up to £500,000 won't be charged Stamp Duty. This measure was introduced in 2007 by the Labour government to promote the development of energy efficient properties in the UK.

This measure is part of a bigger plan to ensure that all new properties will be carbon free in the future.

A typical home uses a lot energy from different sources and for different purposes such as heating or running appliances. A home is said to be "carbon free" when the emissions of carbon dioxide originating from the various energy sources is equal to zero.

Carbon free houses are currently quite rare in the UK. Being carbon free is not a simple task, as the property needs to be designed in such a way that emissions from various energy sources are actively cancelled out by other mechanisms. It is anticipated that the future years will see a massive expansion in the zero carbon energy market.

Carbon emissions come from various sources, but residential properties alone contribute towards at least 25% of all emissions in the UK. Converting an existing home to be carbon free is a difficult task. The government is therefore targeting new homes in their tax incentives as designing a home from the start to be carbon free is a much simpler task than adapting a new one.

Many companies see energy efficient homes as a profitable market. The problem at the moment is that the initial cost of designing a zero carbon home is still very high, and beyond the reach of many consumers. Businesses are now applying some pressure on the government to introduce further incentives so that more property buyers make the choice of energy efficiency for their new homes.

Stamp Duty on a £500,000 property is equal to £20,000, so if you are considering buying a new carbon free home, you could potentially save a lot of money on your purchase. If the property you are planning to buy has a value above £250,000 and is not carbon free, everything is not lost though, and there still ways you could be avoiding SDLT.

There many different Stamp Duty Mitigation techniques that can be used to avoid SDLT so it's important that you speak to a Stamp Duty Mitigation expert to find out how much you could save.

Stamp Duty Mitigation and Sharia Law

11 August 2011

The amount of Stamp Duty that buyers have to pay when purchasing land or property in the UK varies depending on the property price. The higher the property price, the higher the applicable rate of Stamp Duty. For property values above £1,000,000, the stamp duty rate is 5%, which means that the Stamp Duty payable to the government will be at least £50,000!

Because of this, many people purchasing properties above £500,000 or more take advantage of Stamp Duty Mitigation schemes. Stamp Duty Mitigation is a specialist tax planning process that can help a property buyer avoid stamp duty on the purchase.

Different procedures and mechanisms can be used that make use of various loopholes in the UK law. One of the procedures is using Sharia law.

Under Sharia law, Muslims are not allowed to pay interest, so Muslims are allowed to purchase a property and sell it to an offshore company. Instead of applying for a mortgage, where interest is due, the buyer leases the house from the offshore company. As there is no interest payment, the process is compliant with Sharia law.

If a property is bought and immediately sold to another buyer, then no stamp duty is due.

If you are not a Muslim, there are still many other ways you could be avoiding stamp duty. We highly recommend that you talk to a specialist tax planner now about Stamp Duty Mitigation as this will save you a lot of money.