Stamp Duty Land Tax: Non-monetary considerations could affect a SDLT charge | Personal Finance

SDLT is paid on most properties that are valued higher than specific thresholds. The tax will be due on residential properties bought for more than £125,000. It may also be due on non-residential land or properties higher than £150,000.

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However, SDLT may also be due on certain transfers of land or property.

This could be the case for non monetary exchanges known as “considerations”.

Property and land do not always need to be exchanged through money or loans.

Anything of value can be used for a property exchange and the government provides examples of what these chargeable considerations are.

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SDLT

SDLT can affect all forms of transfers (Image: GETTY)

HMRC

SDLT must be paid directly to HMRC (Image: GETTY)

Non-monetary payment can include things such as goods, works or services, release from a debt or transfer of a debt.

It is likely that if these types of payments are involved they will be on top of monetary exchanges.

The government detail that chargeable consideration includes and paid for assets that form part of the land or property involved.

Transfers of a non-monetary nature can be complicated to include within an SDLT calculation but the government provides guidance on situations where they are likely to occur.

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Non monetary transfers of property and land will likely occur:

As a result of marriage, civil partnerships or moving in togetherOn divorce, separation or the end of a civil partnershipOf jointly owned property or landIf the larger share is given as a giftIn the form of a gift or left in a willTo or from a company

The Money Advice Service provides details on how chargeable considerations may work in practice.

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The first step is easy to understand, SDLT may be due if the chargeable consideration is over the £125,000 threshold.

As they explain: “For your main property, SDLT is charged at 2% of what’s between £125,000 and £250,000 and 5% between £250,001 and £925,000.

“You will be charged 10% on anything between £925,000 and £1.5 million and 12% on anything above £1.5 million.

“If this is a second property, or a buy-to-let, then you will pay an additional 3% on all the relevant bands if it’s worth more than £40,000.”

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They provide a more thorough example of how it could work in transfers of outstanding mortgages:

“Joint owners might agree to transfer the ownership of a property they own together to just one of them. For example, an unmarried couple who are splitting up. If you’re taking sole ownership you will need to pay SDLT on the total chargeable consideration.

“For example, a house is valued at £400,000, with £100,000 outstanding on the mortgage and £300,00 in equity.

“The person taking ownership:

“pays the other £150,000 for the other half of the £300,000 equity in the property and“becomes responsible for the other half of the remaining mortgage, which is £50,000.

“This gives a chargeable consideration of £200,000. Under these circumstances, and assuming this is not a second property, you will pay £1,500 SDLT (nothing on the first £125,000 and 2% on the remaining £75,000).”

As complicated as SDLT calculations can be there is little flexibility in its timing. The government details that all SDLT payments due must be with HMRC within a two week time frame. This timing was reduced from 30 days in March 2019. The government urges people to familiarise themselves with the guides they provide on SDLT and ensure they have the correct paperwork in order