Stamp Duty on AST

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  • Stamp Duty on AST

    I have a property which i rented on a 6 month AST. The original term was
    18/05/06 - 17/11/06 and the rent was £600pcm. I let the tenant stay on after the fixed term without renewing the tenancy, so its running periodically.

    Should i have paid Stamp duty? I am evicting the tenant for rent arrears and have a court date in late March 07.

  • #2
    The short answer is No

    P.P.
    Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

    Comment


    • #3
      Originally posted by P.Pilcher View Post
      The short answer is No

      P.P.
      Thanks, i was worried because I got a letter form court today saying that evidence that stamp duty has been paid must me shown or the claim may be dismissed.

      Comment


      • #4
        Er, not sure that P.Pilcher is correct.
        1. Stamp Duty was abolished in 2003.
        2. Stamp Duty Land Tax, which replaced it, has a different set of rules. It is transaction-based, not document-based for a start.
        3. SDLT can be payable on any Letting Agrement or Lease. However, the amount payable may be nil. In some cases, a form SDLT60 Certificate (showing why full SDLT1 Return is not required) may be used.
        4. For SDLT rates etc., go to HM Revenue and Customs website or see Schedule 5 to Finance Act 2003 re SDLT on rent.
        5. Section 95 of that Act makes non-compliance a criminal offence.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


        • #5
          Originally posted by jeffrey View Post
          Er, not sure that P.Pilcher is correct.
          1. Stamp Duty was abolished in 2003.
          2. Stamp Duty Land Tax, which replaced it, has a different set of rules. It is transaction-based, not document-based for a start.
          3. SDLT can be payable on any Letting Agrement or Lease. However, the amount payable may be nil. In some cases, a form SDLT60 Certificate (showing why full SDLT1 Return is not required) may be used.
          4. For SDLT rates etc., go to HM Revenue and Customs website or see Schedule 5 to Finance Act 2003 re SDLT on rent.
          5. Section 95 of that Act makes non-compliance a criminal offence.
          So should i have paid stamp duty?

          Comment


          • #6
            No.

            Its the tenants responsibility to pay it now. Whoopee!!
            All posts in good faith, but do not rely on them

            * * * * * ** * * * * * * * * * * * *

            You can search the forums here:

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            • #7
              Stamp duty on AST

              Smandir,
              The answer is NO.
              Stamp duty is only payable when the AST relates to a very high rent - I think in the region of £30000 per year as a lower limit.
              John

              Comment


              • #8
                Originally posted by johnjw View Post
                Smandir,
                The answer is NO.
                Stamp duty is only payable when the AST relates to a very high rent - I think in the region of £30000 per year as a lower limit.
                John
                Don't think so! If advising lessee/tenant potentially liable for SDLT, use statutory calculator (hard mathematical formula)- depends on rent amount per year, rent review clauses/mechanism, and term length too.
                Please explain source of £30 000 figure.
                JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                4. *- Contact info: click on my name (blue-highlight link).

                Comment


                • #9
                  Must agree with jeffrey john, it is not based upon a "yearly" rent, but upon the total value of the agreement, INCLUDING renewals and any statutory periodic tenancies that may occur - AFAIK!
                  Any posts by myself are my opinion ONLY. They should never be taken as correct or factual without confirmation from a legal professional. All information is given without prejudice or liability.

                  Comment


                  • #10
                    I was brief because this question is asked regularly and the full details have been posted here quite recently. My notes state that STLT on an AST does not have to be paid if the rent due over the term does not exceed £5000. The term being the fixed period of the AST. I am not sure that these figures are now correct, but I have never had a judge question the validity of my ASTs which have never been stamped. The enquiry line number is 0845 6030315 if you want a definitive answer.

                    P.P.
                    Any information given in this post is based on my personal experience as a landlord, what I have learned from this and other boards and elsewhere. It is not to be relied on. Definitive advice is only available from a Solicitor or other appropriately qualified person.

                    Comment


                    • #11
                      Here is the link to the HMRC's online calculator.

                      http://ldcalculator.inlandrevenue.gov.uk/

                      Best regards,
                      Joel

                      Comment


                      • #12
                        Stamp duty on AST

                        Letlink.co.uk offers factsheet 32 dealing withAST's and stamp duty.
                        Basically legislation in force from 1st December, 2003, sets a threshold limit of £125,000 for residential leases. With a few minor adjustments, if the rental does not exceed this amount, then no stamp duty is chargeable.
                        The factsheet points out that the vast majority of private tenancies are below this threshold and thus the change (ie. the 2003 legislation) "will be a welcome simplification for landlords."
                        There are a few complicating details eg term of tenancy is important, but ordinary tenancies of say 6 months or a year duration, at rents of up to say £2000 pcm - come nowhere near the threshold.
                        As P Picher mentions, this subject has been discussed on the Forum fairly recently. The conclusion then, was that SD is not important for most residential tenancies.

                        Comment


                        • #13
                          Originally posted by P.Pilcher View Post
                          I was brief because this question is asked regularly and the full details have been posted here quite recently. My notes state that STLT on an AST does not have to be paid if the rent due over the term does not exceed £5000. The term being the fixed period of the AST. I am not sure that these figures are now correct, but I have never had a judge question the validity of my ASTs which have never been stamped. The enquiry line number is 0845 6030315 if you want a definitive answer.

                          P.P.
                          I believe those figures of £5,000 is from the Landlordzone site, but is incorrect or out of date. I think the nil band extends to £110,000 over the life of an individual tenancy.
                          Assuming that is correct, then the OP has no VAT liability.
                          ASSUME NOTHING - QUESTION EVERYTHING!

                          Comment


                          • #14
                            johnjw mentions a threshold of £125 000. However, that relates to the total.

                            On a new long lease, the premium (purchase price) will dwarf the rent.

                            On an AST, there's no premium. One has to calculate the Net Present Value of all the rent for the whole term, allowing a reduction in future years' rents which - for mathematical purposes - are treated as payable now.
                            So a rent of £26 000 p.a. for fve years MIGHT still have an NPV of < (or =) £125 000. Only if NPV > £125 000 is SDLT payable.

                            And, in a "disadvantaged" area, the threshold is £150 000 anyway.

                            Anyway, smandir is in the clear on this case (except that form SDLT1 applies in all non-gratuitous cases, whether or not SDLT is payable. Perhaps it's the consequent SDLT5 Certificate that the Court wanted?)
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment

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