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BBC and SDLT Mitigation

The attached link is a piece written recently by the BBC on stamp duty avoidance. The journalist that wrote this piece approached me on the phone asking if I would contribute to an article. I was very suspect and told her that I did not want to be associated with anything that was trying to damn the scheme. She assured me that she was looking at writing an unbiased piece.

Mmmmm? What do you think?

http://www.bbc.co.uk/news/business-15479321

SDLT Mitigation Just Needs You

If you’re currently purchasing or considering the purchase of either residential or commercial property, you’ve probably assumed that you will have to pay SDLT. However, with recent changes in the law and a little careful planning, we can help you unlock significant tax savings.

Generally, SDLT is payable in the UK on land transactions such as the acquisition, disposal or variation of an interest in land. It is a self-assessed tax, which increases as the value of the transaction increases. Currently, SDLT is payable according to the following bands:

Relevant Consideration Percentage

Not more than £125,000 0%

More than £125,000 but not more than £250,000 1%

More than £250,000 but not more than £500,000 3%

More than £500,000 4%

In addition to the current bands of SDLT, the government intends to introduce an additional band. The proposed band applies to residential property with consideration over £1 million. The new band attracts SDLT payable at 5% and will apply to transactions with effective dates on or after 6th April 2011.

How we can help

Brand New SDLT Mitigation Video

Prideaux Associates launches its new marketing video. In conjunction with Wonkana Productions, this innovative marketing video has been released to show to prospective introdcuers.

SDLT Mitigation

Stamp duty thresholds ‘could have doubled’

Higher stamp duty thresholds would be more than double their current level if they had risen in line with house prices, according to new research by Halifax.

It has examined the impact of the stamp duty thresholds over the past ten years using house prices and home sales from the HM Land Registry and Halifax’s own statistics database. Stamp duty revenue data has been sourced from the HM Revenue and Customs.

The higher stamp duty thresholds – £250,000 and £500,000 – have been unchanged since their introduction in July 1997 despite a 140% increase in house prices over the period to January 2011. If the higher stamp duty thresholds had been increased in line with house price inflation since July 1997, the £250,000 threshold would now be £600,000 and the £500,000 threshold would stand at £1,200,000.

The failure to raise the higher stamp duty thresholds has helped to drive a five-fold increase in the proportion of home buyers required to pay stamp duty at the higher rates over the past decade.

Halifax calculates that the proportion of residential property sales worth over £250,000 and, therefore, attracting a minimum stamp duty rate of 3% stood at 26% in 2010; over five times the percentage of sales over £250,000 in 2000 (5%). There are an estimated five million homes in the UK that are now valued above the £250,000 stamp duty threshold compared with 875,000 in 2000.

Stamp duty revenue rose by 12% from £2.9billion in 2008-09 to £3.3billion in 2009-10. However, stamp duty revenue has more than halved since reaching a recent peak of £6.7billion in 2007-08.

This is largely due to the declines in both the number of house sales and house prices over the period. Some 86% of the total residential stamp duty revenue raised in 2009-10 was accounted for by the amount raised at the higher stamp duty bands. Ten years ago, the higher stamp duty bands accounted for 49% of total residential stamp duty revenue.

The average stamp duty bill has risen by 88% (£838) over the past decade with home buyers seeing the amount they pay rise from an average of £955 in 2000 to £1793 in 2010. The average stamp duty paid is currently equivalent to 5.4% of average UK full-time earnings, up from 4.2% in 2000. Stamp duty is highest in proportion to earnings in the capital with the average stamp duty paid accounting for 19% of a Londoner’s average annual full-time earnings.

In contrast, the average house price in the North East remains below the threshold for the lowest stamp duty band.

Martin Ellis, Housing Economist at Halifax, said: “There has been a substantial rise in the percentage of homebuyers paying stamp duty at the higher rates over the past decade, reflecting the combination of significant increases in house prices over the period as a whole and the fact that the higher stamp duty thresholds of £250,000 and £500,000 have remained unchanged since their introduction in 1997.

“However, it is encouraging that a number of steps have been taken in recent years to aid those looking to get on the property ladder, including the temporary increase in the starting threshold from £125,000 to £250,000 for first-time buyers.

“The future for stamp duty continues to provoke much discussion with some advocating fundamental changes including index linking the stamp duty thresholds to house price inflation or even replacing the current system with an annual property tax. Any further changes to stamp duty will ideally reflect the economic benefits associated with promoting greater residential mobility.”

Davies Arnold Cooper calls for crackdown on property scams

A wave of property scams, in which investors are being induced to pay out hundreds of thousands of pounds, is sweeping the UK. The scams involve high pressure cold calls in which potential investors are promised high returns in exchange for purchasing strips of land. A number of schemes are being investigated by the Financial Services Authority (FSA), to see whether they are unauthorised collective investment schemes. Meanwhile, the City of London Police’s Economic Crime Directorate is in the course of making enquiries into what is believed to be a growing problem. Sydney Fulda, dispute resolution partner at international law firm Davies Arnold Cooper comments, “We are calling for a crackdown on these property schemes; the authorities must act sooner rather than later. We are investigating whether schemes are fraudulent and looking at ways to recoup the monies that investors have invested in them. The potential losses suffered can be very significant indeed.”

SDLT Mitigation

SDLT planning may provide enormous financial benefits to clients buying property over £250K and above. At a recent Law Society event (November 2010) it was mentioned that the real benefits start at purchases over 1 million pounds. However, with the current economic climate lingering the scheme may be of interest to a much wider audience and is available from some providers for purchases of £250K and above. There are certain ‘stipulations’ to adhere to with each of the schemes, of course, of which should be made clear by the provider.

It’s impossible to go into any real depth on any one scheme here but here are some highlights of what we would expect a client to see in any particular plan:

1).        That  a scheme has been running for a good length of time (even with amendments).
2).        That its proven to work in  a good number of cases.
3).        The planning is backed by a robust Counsel’s Opinion given by leading Tax Counsel.
4).        That the plan has been disclosed to HMRC and has a corresponding scheme disclosure number ensuring that it is fully compliant with HMRC requirements for tax planning.
5).        That any queries by the Inland Revenue have been promptly and easily satisfied.
6).        That the saving from the scheme is substantial.
7).        That there is a ‘no-win-no-fee’  undertaking, via which all fees are fully refunded to the client in the event of a successful challenge by HMRC.
9).       That the scheme is low risk and non-aggressive and does not involve either the vendor or the lending institution involved in the transaction or effect their title, security or ability to realise funds from the sale of the property.

This tax planning can seriously improve your wealth by providing savings of up to 50% on Stamp Duty, it is worth exploring. You may be aware that a certain national newspaper ran an article (2009) about the previous (Labour Party) government’s use of SDLT planning which saved them £210,000 in stamp duty land tax.

It is important to note that with this tax planning, a specialist conveyancing solicitor is a crucial link of it’s success. Most conveyancing solicitors generally will not or have not taken the time to properly review the planning and most importantly the council’s opinion and as a result may advise against the schemes due to lack of knowledge.

National UK Property Search

Prideaux Associates is proud to announce the launch of its new National UK Property Search Portal.

www.prideauxpropertyfinder.co.uk

This is a fully comprehensive search engine of all the properties in the UK. If you are looking to buy, to sell or to rent, then this is where you need to look first.

www.prideauxpropertyfinder.co.uk

We are NOT an estate agent.

www.prideauxpropertyfinder.co.uk

We work with homemovers who want to lower the cost of moving by mitigating their stamp duty and the new national UK property search portal shows the savings that can be made against every property in the UK over £250,000

www.prideauxpropertyfinder.co.uk

is it possible to substantially reduce or mitigate entirely the stamp duty payable on your property purchase?

The answer to your question is possibly, not definitely.

Unfortunately you may have seen websites promoting simple cost effective solutions that guarantee that your liability will legally be reduced to zero – nothing could be further from the truth. Whilst it is possible to substantially reduce or mitigate entirely the stamp duty payable on your property purchase by implementing appropriate tax planning, the outcome is not guaranteed.

Solutions are possible, just not definite.

In the past many ‘off the shelf’ schemes were available but these have now largely been closed by HM Revenue & Customs and understandably access to the details of schemes that remain unnoticed are strictly confidential.

A bespoke tax structure reviewed by legal counsel before implementation remains the prudent approach. Your tax planning may still be challenged by HMRC but you are protected from accusations of tax evasion because of the council sought at outset.

A successful structure will save thousands on properties over £250,000

• SDLT structures on properties worth less than £250,000 are not advised.

Based on a purchase of £2.5 million the figures are as follows:
SDLT without planning – £125,000
SDLT with planning – nil
Fees: £50,000 + vat
Saving: £65,000

Now stamp duty land tax avoidance is not as easy as ABC

Search is on for stamp duty mitigation avoidance schemes