SDLT is payable on a new build property in the same way as any residential property but there are some additional considerations which could reduce a purchaser’s SDLT.
Developer Incentives
Many developers will offer a potential purchaser of a new build property one or more incentives to make the property more attractive and they will be detailed in the CML Disclosure of Incentives Form. Many will make no difference to the SDLT calculation but there are some incentives that should not form part of the consideration for SDLT purposes and the correct treatment of such incentives could save your clients money.
Chargeable Consideration
SDLT is charged on the chargeable consideration paid for a property and this is defined in HMRC’s guidance as “anything that is paid for assets that form part of the land or property.” Generally, this means that anything “attached” to the property or land will be included as part of the consideration but there are some incentives that will fall outside this definition and should therefore be excluded from the calculation of SDLT. Relatus have found that conveyancers rarely adjust the TR1/TP1 contract price when completing the SDLT1. Chargeable consideration should be reduced for the likes of developer funded deposit assistance, SDLT contribution, legal fees assistance, etc. Clients will be grateful to their conveyancer for identifying savings in SDLT for one of the most expensive transactions they are ever likely to make.
Be wary…
HMRC has a restrictive approach to SDLT and will apply a narrow interpretation of the rules meaning the risk to a conveyancer is great, particularly given the additional interest and penalties for any underpayment. This can result in an overly cautions SDLT treatment which, whilst protecting your client and firm from any adverse action by HMRC, will mean your clients may be paying more SDLT than they need to.
How Relatus can support conveyancers dealing with the purchase of a new build property
Relatus Ltd is a tax advisory firm specialising in SDLT, we can perform a check of the SDLT treatment for a potential transaction and highlight any potential savings of SDLT. We have over 10 years experience in this niche area of taxation and our team of accountants, qualified members of the ATT and non-practising solicitors will provide expert advice to assist conveyances with their duty of care and their clients to mitigate the SDLT expense..
For more information about the services offered by Relatus visit www.relatus.co.uk
