Avoiding Stamp Duty

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Avoiding Stamp Duty Land Tax With Zero Carbon Homes

25 September 2011

Avoiding Stamp Duty Land Tax (SDLT) is possible. Many techniques can be used; today we are going to discuss Zero Carbon homes.

The Stamp Duty on property purchases can make it difficult for people to invest in a new home or parcel of land. Learning how to make your property purchases without qualifying for SDLT, or at least how to minimise it, can save you a considerable amount of money. Fortunately the law allows you a variety of opportunities to reduce or be avoiding Stamp Duty. In fact, through September of 2012 you can purchase a home worth no more than £500,000 and be avoiding Stamp Duty, so long as the home meets the zero carbon SDLT exemption guidelines. This allows you to not only save on the Stamp Duty, but also to own an efficient and clean home.

Of course, a carbon-free home is not one that functions without the use of any energy. It is simply one that does not function as a source of carbon emissions. Thus, the idea behind the zero carbon Stamp Duty exemption is to reward people who will help to gradually reduce pollution across the country whilst taking advantage of the savings in stamp duty.

You might think that after several years with this exemption in place, carbon-free homes are now prevalent throughout the country. However, carbon-free homes still remain rare. As strong as the incentive is to create carbon-free homes, it is still difficult and expensive to build them. As the technologies to make this process easier and less expensive become more readily available, it is expected that many more of these homes will be built or retrofitted.

Across the country, residential carbon emissions make up approximately 25% of total carbon emissions. Since it is more difficult to plan retrofits than new homes that produce no carbon emissions, most of the government incentives to go carbon-free involve new homes.

This is why so many home building companies are now shifting into the production of zero carbon homes. This is a good thing, because the cost of designing one of these homes is prohibitive for most individuals, but can be spread out across many similar homes when it is done by developers. However, the government is going to have to continue to increase the zero carbon incentives for developers in order to increase the percentage of homes that meet this standard.

In the meantime, what is your incentive to purchase a zero carbon home? The zero carbon SDLT exemption for homes of up to £500,000 is as much as £20,000. There are other Stamp Duty options you should consider if you cannot find the right zero carbon home. If you want to be avoiding Stamp Duty, it is important to talk with a tax professional that specializes in Stamp Duty mitigation.

Chattels And SDLT mitigation

19 September 2011

Avoiding stamp duty is possible and a variety of different methods may be used. An effective technique for SDLT Mitigation is the use of chattels. Basically speaking, chattels are tangible assets such as furniture, fixtures, and fittings which are not, technically speaking, a permanent part of a property. They are, nonetheless, part of a transaction between a buyer and property seller.

As part of a property purchase, chattels may be treated in a variety of different ways. In general terms, they can be included in the sale of the property, they may be listed separately from the property for an agreed upon price, or they may be omitted altogether. A fixtures and fitting form may be used to include chattels as part of the property contract and in the process reduce the amount of Stamp Duty payable.

Before taking a look at how chattels can help buyers avoid stamp duty, it is helpful to take a look at the different tax rates and scales. Avoiding Stamp Duty for properties of less than £125,000 is not required as there is no SDLT due. After that, for properties of £125,000 to £250,000, the stamp duty rate is 1%; for properties of £250,000 to £500,000, the rate is 3%; locations of over £500,000 but less than £1,000,000 have a 4% stamp duty; and for properties of more than 1 million pounds, the rate rises to 5%.

Chattels are included in the price when a property is sold, and most of the time they have no effect on the tax paid by the buyer. However, there are certain cases when listing the chattels separately can save buyers substantial amounts of money through SDLT mitigation. For the most part, this technique is applied to properties which are close to the lower end of the stamp duty tax threshold.

Avoiding Stamp Duty with chattels is best illustrated with an example:

If you are buying a property for £126,000, and that property includes fixtures and other chattels which are valued at £2,500, then listing those chattels in a separate contract brings the actual property price down to £123,500. This amount is below the lowest tax bracket for which SDLT is due, which means that simply by listing the chattels in a separate contract, you can save a minimum of £1,260 which would have been charged in tax had the property been purchased for £126,000.

Obviously this approach to SDLT mitigation does not work for all properties since some are not priced near the lower end of the stamp duty tax brackets. However, for properties which are, chattels can help buyers significantly reduce or be avoiding Stamp Duty altogether. It is important to keep in mind that chattels are basically anything that could be removed by the seller. Obvious examples are furniture and window treatments but there are a variety of other items which may also be considered chattels.

Using chattels to reduce stamp duty is just one SDLT mitigation method. If you are considering the purchase of a property of more than £250,000, talking to a stamp duty tax expert can make avoiding Stamp Duty a reality. We would recommend you complete our form so that we can put you in touch with an expert.

Avoiding Stamp Duty In The UK

18 September 2011

It can be particularly difficult to purchase property in the United Kingdom. Property prices are still beyond what the average wage packet can realistically afford, despite economic difficulties that are putting downward pressure on the prices of many goods. Making things even more difficult for those who wish to buy a property is the cost of stamp duty.

The Stamp Duty Land Tax, or SDLT, requires the purchaser of property within England and Wales to pay an extra tax based on a percentage of the property's purchase price. This percentage increases in line with the property price, rising to as high as 5% for properties that sell for over £1,000,000, or as low as 3% for properties from £250,000 to £500,000. Many prospective property buyers go out and look for property before actually considering the impact of this tax on their house purchase.

SDLT mitigation is a service you can receive from professional tax planners to help you reduce or completely avoid the SDLT that you would otherwise have to pay. These tax planners know how to help you plan your transactions so you can avoid paying more than your fair share of taxes. With the economy being poor and housing being expensive, it is important to understand how you could be avoiding Stamp Duty and saving several thousand pounds.

One of the ways you can be avoiding stamp duty is to purchase a new home that is carbon neutral - in order words that the carbon footprint for the building and running of the property is as close to zero as possible. This 2007 addition to the SDLT law has not only helped to reduce pollution, but has helped middle class citizens purchase new homes as the stamp duty can be avoided. Talk to a professional tax planner to find out more about this and other methods used when avoiding Stamp Duty.

Most professional tax planners in the UK use some sort of SDLT savings formula to determine how much their services will cost you. In most cases, around half of the amount of your SDLT savings will be the fee you pay for the service. You may find other service fee structures, ranging from a base fee of a few thousand pounds plus a percentage of savings to a flat fixed fee. Make sure you deal with a professional tax planner that guarantees the legality and success when avoiding Stamp Duty. Many services will also come with HMRC investigation insurance, so in the event there is an investigation from HMRC and the case is found in their favour the insurance will cover the shortfall with HMRC, protecting the purchaser in the process.

It is important to realize that the potential savings from Stamp Duty Mitigation offered by professional tax planners will be based in large part on the value of the property you wish to buy. In other words, SDLT mitigation for a £250,001 property may only save you a couple thousand pounds, while the process could save you as much as £25,000 on a £1,000,000 property. This is an important consideration when deciding whether to hire a professional tax planner to help you realise Stamp Duty savings. Avoiding Stamp Duty works with some of the UK top SDLT mitigation experts, so contact us today and we'll make sure we put you in touch with the right person to help with your enquiry.