From the 1st of March 2019, SDLT will be payable within 14 days of completion. After this deadline, HMRC can charge interest and impose fines.
What is SDLT?
Stamp Duty Land Tax (SDLT) is a tax which is payable when:
- you purchase a freehold property;
- you take a grant or assignment of a new or existing leasehold;
- you purchase a property through a shared ownership scheme; or
- land or property is exchanged for payment or other forms of consideration, for example, assuming the debt of an existing mortgage following the transfer by an existing proprietor.
Transactions must reach a certain threshold for SDLT to be payable and various types of relief may be available. Generally, for a freehold purchase of a commercial property, SDLT will be payable when the chargeable consideration exceeds £150,000. You are also required to notify HMRC when the chargeable consideration for a freehold purchase exceeds £40,000, even though no SDLT may be payable.
How and when do you pay SDLT?
SDLT is paid by filing an SDLT return with HMRC. In almost all transactions where SDLT is payable, the solicitor, agent or conveyancer will file the return for you. It remains your responsibility to check that the details contained within the SDLT return are correct, and that it has been filed by the deadline.
Under the current system, the SDLT return and any tax must be paid within 30 days of the effective date, which, generally, is the date the transaction is completed. The rules can vary depending on the type of transaction and whether a purchaser or tenant has taken occupation.
Consequences of missing the SDLT deadline?
If you fail to submit the return and pay the SDLT before the submission deadline, you will incur an automatic penalty of £100.
If you fail to pay the SDLT within 3 months after the submission deadline, you will incur a further penalty of £100.
You will also be charged interest on the unpaid SDLT.
Changes from 1 March
For most transactions completing on or after 1 March 2019, the current submission deadline will be reduced from 30 days to 14. The consequences of failing to submit the return within the 14-day submission deadline are the same as pre-1 March 2019.
Whilst the amount of SDLT you pay will not change, you will need to provide approval of the draft form of the SDLT return and ensure your solicitor or agent are in funds to cover the SDLT liability prior to submission. Your agent may also require further information from you to draft the SDLT return.
Given the reduction to the submission deadline, it is vital that you deal with any queries raised by your solicitor or agent as soon as possible, to avoid incurring avoidable financial penalties.
If you are aware that the effective date is approaching and the draft SDLT return has not been provided for your approval, you should raise this with your solicitor or agent. You should also ensure that they are holding the requisite funds to pay the SDLT liability, following completion of the transaction.
If you would like to discuss SDLT, or require assistance with any other property matters, please do not hesitate to contact a member of the Property Team via our Team page.
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