Stamp Duty Land Tax (SDLT)

The effective date

This is the date that the SDLT tax liability occurs, many consider that date to be the day of completion, this could well be the case. The rules actually state that the effective day can be the date of completion, or the date on which the contract is ‘substantially performed’ whichever is earlier.

Substantial performance can be when most of the purchase price is paid, or when the purchaser has unfettered access to the land. In some cases, substantial performance could take place well before the actual date of completion, triggering a liability that the developer is not prepared for.

It is important developers are in control of the effective date.

Mixed use property

A transaction comprising both residential and non-residential components can vastly reduce the SDLT liability. Developers should be mindful of the mixed-use rules when putting together a purchase.

Linked transactions

When a series of transactions between the same buyer and seller are carried out together, they can treated as a single transaction with regards to SDLT. This can be advantageous as it can sometimes change the subject matter of the purchase from residential to non-residential or enable access to reliefs such as multiple dwellings relief. A substantial SDLT saving can be achieved.

SDLT reliefs – areas that are particularly problematic include:

Recognising the point at which bare land or commercial property becomes a dwelling

Group relief, available on the transfer of properties between companies in the same group

There are extremely complicated rules surrounding partnerships and LLP’s. A good understanding of these can sometimes result in SDLT not being payable at all