Shared ownership stamp duty: staircasing

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Are you considering staircasing? Do you know whether or not you’ll need to pay stamp duty (also known as stamp duty land tax or ‘SDLT’) on staircasing? Read on.

This is the second of three articles. All three articles were written by Sean Randall, in collaboration with Zahrah Aullybocus. Sean is a stamp duty expert and partner at Blick Rothenberg. Zahrah is a specialist consultant solicitor (and Shared Ownership Resources sponsor).

In the first article we explained what homebuyers need to know about SDLT when buying a shared ownership home. This article covers what happens when owners of shared ownership homes staircase (purchase additional shares in their home). The final article will explain the SDLT charge that arises when selling a shared ownership home

Do I have to pay SDLT on staircasing?

It depends… In our first SDLT article we explained options for people buying a new-build shared ownership home. In particular, whether to pay SDLT in one go upfront, or to pay in stages. Paying SDLT in one go upfront is referred to as making a ‘market value election’. Say you bought a new-build, and made a market value election, then there would be no further SDLT to pay on staircasing.

On the other hand, perhaps you bought a resale property… In that case, the answer depends on which option the original buyer chose. If they made a market value election, before selling their share to you, the benefit of the election ‘runs with the lease’. (So long as a statement is included within the lease itself to confirm the market value election). That means that you enjoy the same benefit even though you didn’t actually make the market value election yourself.

Unfortunately, a market value election can only be made when the property is first purchased, not on a re-sale of the property. You can’t select market value election on a re-sale shared ownership home if it wasn’t made originally.

Paying in stages: when do I start paying SDLT?

If you’re paying SDLT in stages, you’ll make your first payment when you buy the initial share – in other words when the lease is granted. No further SDLT is due unless and until you staircase over 80%.  This includes, for example, where your premium is over £40,000.

Paying in stages: how much SDLT do I pay when I staircase over 80%?

Paying SDLT on staircasing is only relevant where:

  • a market value election was not made, and
  • the staircasing transaction results in the buyer owning more than 80% of the property.

To calculate the tax (assuming the lease was granted on or after 12 March 2008): 

(i)         Establish what you paid initially for your purchase and all previous staircasing transactions (if any);

(ii)        Confirm how much you are paying for the next share to take it over 80%;

(iii)       Add these amounts (above) to calculate how much you have paid for the property altogether (including any previous staircasing transactions);

(iv)       Calculate the SDLT payable on the total at the rates in force at the date of the latest staircasing transaction;

(vi)       Find a fraction of the SDLT. The relevant fraction is the amount paid for the latest staircasing transaction divided by the total amount paid.

Staircasing Stamp Duty – Example 1

Andy acquires a shared ownership lease of a new-build house for a term of 125 years in July 2019. He is unmarried and is not a first-time buyer.

Portrait of man looking thoughtfully out of window to illustrate staircasing stamp duty feature.

Andy does not make a market value election. He pays £175,000 for a 50% share. The monthly rent is £438. The amount of SDLT payable initially is £1,000: (£125,000 @ 0%) + (£50,000 @ 2%). The net present value (calculation required by HMRC to determine the rental income of the lease over its lifetime) of the minimum rent does not exceed £125,000; hence, no SDLT is due on the rent.

Andy then staircases to 100% in October 2022, paying £200,000. The amount of SDLT payable is based on the total amount paid for the lease and the staircasing transaction, £375,000 (£175,000 + £200,000).  So first we work out what the SDLT due on £375,000 would be at the current rates (assuming there is no change in SDLT rates): this is £6,250. The first £250,000 of the £375,000 is taxed at 0% and the final £125,000 of the £375,000 is taxed at 5%.

But only part of the £6,250 is payable – the part attributable to the staircasing transaction that resulted in Andy owning more than 80%. In Andy’s case it is £3,333. The relevant part is found by dividing the price paid for the relevant staircasing transaction by the total amount paid: (£200,000 / £375,000) x £6,250. This means that £3,333 of SDLT is payable on the staircasing transaction within 30 days of the transaction. (Note this is a different deadline to the usual 14-day deadline for filing an SDLT return and paying SDLT.)

Check your lease date

Slightly different rules apply if the lease was granted before 12 March 2008.

Staircasing more than once over 80%

Staircasing more than once over 80% may mean paying further SDLT on the previous chargeable staircasing transaction(s), see below.

Staircasing above 80% on sale of the property

No SDLT is generally payable on staircasing above 80% in conjunction with a sale of the property. This will be explained in the third article.

Staircasing Stamp Duty – Example 2

As for Example 1, but this time Andy staircases twice, initially to 75% paying £90,000 in October 2021 and then to 100% in October 2022 paying £110,000.

No SDLT is payable on the first staircasing transaction, as it does not result in Andy owning more than 80%. The amount of SDLT payable on the second staircasing transaction is based on the total amount paid for the lease and the two staircasing transactions, £375,000 (£175,000 + £90,000 + £110,000).

So first we work out what the SDLT due on £375,000 would be at the current rates (assuming there is no change in SDLT rates): this is £6,250, as for Example 1. But only part of the £6,250 is payable – the part attributable to the staircasing transaction that resulted in Andy owning more than 80%. In Andy’s case it is £1,833. The relevant part is found by dividing the price paid for the relevant staircasing transaction by the total amount paid: (£110,000 / £375,000) x £6,250. This means that £1,833 of SDLT is payable on the second staircasing transaction within 30 days of the transaction.

Staircasing Stamp Duty – Example 3

As for Example 1, but this time Andy is a first-time buyer.

He pays no SDLT on the grant of the lease because the amount paid (£175,000) is below £300,000 (the nil-rate band threshold when first-time buyer relief is clamed). And if the net present value of the rent had exceeded £125,000, then the relief would have exempted the charge on rent too.

When Andy staircases, the tax is calculated as in Example 1 and Example 2. He cannot claim first-time buyer relief on staircasing and his prior claim for the relief is irrelevant when calculating the SDLT due on staircasing.

What if I staircase more than once above 80%?

For the first staircasing transaction over 80%, see the answer immediately above. For any further staircasing transactions, the same steps need to be followed: find the SDLT payable on the total amount paid using the rates in force at the relevant date and find the fraction of the SDLT attributable to the staircasing transaction. The SDLT paid on any earlier chargeable staircasing transactions needs to be reviewed and any further SDLT chargeable needs to be paid.

Staircasing Stamp Duty – Example 4

As for Example 1, except Andy staircases twice (having paid the initial purchase price of £175,000): once to 85% paying £125,000 in October 2021 and again to 100% in October 2022 paying £55,000.  

First Staircasing

The amount of SDLT payable on the first staircasing transaction is based on the total amount paid for the lease and the first staircasing transaction, £300,000 (£175,000 + £125,000). The SDLT due on £300,000 (at the SDLT rates in force at October 2021) is £5,000. The first £125,000 of the £300,000 is taxed at 0%, the next £125,000 of the £300,000 is taxed at 2% and the final £50,000 of the £300,000 is taxed at 5%.

The part of the £5,000 payable on the first staircasing transaction is £2,083: (£125,000 / £300,000) x £5,000. This means that £2,083 of SDLT is payable on the first staircasing transaction within 30 days of the transaction.

Second Staircasing

The amount of SDLT payable on the second staircasing transaction is based on the total amount paid for the lease and the two staircasing transactions, £355,000 (£175,000 + £125,000 + £55,000). The SDLT due on £355,000 (at the SDLT rates in force at October 2022) is £5,250. The first £250,000 of the £355,000 is taxed at 0%, and the final £105,000 of the £355,000 is taxed at 5%. The part of the £5,250 payable on the second staircasing transaction is £813: (£55,000 / £355,000) x £5,250. This means that £813 of SDLT is payable on the second staircasing transaction within 30 days of the transaction.

The SDLT due on the first staircasing transaction now needs to be reviewed. The part of the £5,250 payable on the first staircasing transaction is now £1,848: (£125,000 / £355,000) x £5,250. As £2,083 was paid on the first staircasing transaction, no further amount of SDLT is payable. Note that it is not possible to reclaim the difference between the SDLT due (£1,848) and the SDLT paid (£2,083)..

If SDLT was paid on the rent because the net present value of the rent exceeded £125,000, the buyer cannot reclaim SDLT on the rent when they staircase to 100%. It is irrelevant that the amount of rent payable reduces or the lease ends on staircasing. In other words, the SDLT on the net present value of the rent is calculated based on the assumption that the rent will be payable for the term of the lease. The rent reduction or lease termination consequential on staircasing does not entitle the buyer to a repayment of the SDLT on rent.

First-time buyer relief is available if the amount initially paid does not exceed £625,000 (see above). Again, the relief must be claimed in the SDLT return. If the buyer staircases, it is irrelevant that more than £425,000 (the threshold for the nil rate band) or £625,000 (the absolute threshold for the relief) is paid in total: the relief is not withdrawn.

Do I need to inform HMRC when I staircase?

It depends….

If you haven’t made a market value election, AND you are staircasing above 80%, you must inform HMRC via an SDLT return. But staircasing below or up to 80% is not notifiable, even if the amount paid is above £250,000 (the SDLT nil rate threshold).

How do I tell HMRC about a staircasing transaction?

In theory, SDLT is a self-assessed tax. But don’t worry! Your solicitor will complete a SDLT return for you.

The SDLT return is particularly important where you’re purchasing your home with a mortgage. This is because your mortgage can’t be registered without a SDLT return.

NOTE TO SOLICITORS: There are no HMRC codes specific to staircasing transactions. The return must be completed as if an existing lease of the property is bought for the purchase price save that the transaction will be ‘linked’ to the initial purchase of the lease and any earlier staircasing transactions. It will not, therefore, be obvious from the SDLT return that the return relates to a staircasing transaction and it would be prudent to send HMRC a short explanatory letter.


Updated 11 October 2022 to reflect Government changes to SDLT.


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31 Comments

  1. Katrina
    August 2, 2022
    Reply

    Thanks so much for this. This is the first article I’ve ever found that actually explains clearly how stamp duty works for shared ownership.

    • Sue
      August 2, 2022
      Reply

      Many thanks, Katrina. I’m glad you found the feature useful. I’ll pass your comment onto Sean and Zahrah.

  2. Kevin
    August 26, 2022
    Reply

    This is very helpful! In the case of example 2, wouldn’t HMRC view transaction 2 and 3 as linked transaction, and ask for additional tax on transaction 2 (that was ‘avoided’ because it did not result in Andy owning >80%) to be paid at the time of transaction 3?

    • Sue
      August 26, 2022
      Reply

      Thanks for your query, Kevin. Sean has responded below.

  3. Sean Randall
    August 26, 2022
    Reply

    Hi Kevin – Good question. The two transactions would be “linked”, which means paying tax on 3 based on the total of the price paid for 2 and 3, and finding a fraction of the tax attributable to 3, but it doesn’t mean that tax is due on 2 because the transaction (staircasing up to 80%) was not chargeable. In other words, 3 doesn’t make 2 chargeable – rather 2 remains exempt.

  4. Iulian
    October 25, 2022
    Reply

    By far the best article out there on staircasing. Unfortunately I still can’t quite work out what would be the SDLT in our situation. We’ve bought a 40% share in re-sale flat in October 2017 (£136,000 for 40% share) and we now want to staircase to 100% (£189,000 for 60% share).
    This bit is easy (136000+189000-250000)*189/325=£2,180 SDLT due.

    However… The lease was granted in May 2006 and the previous owner paid around 80k for the 40% share so no stamp duty was due.

    Is there any additional SDLT payable by us? As in are these transactions considered linked in any way for stamp duty purposes?

    • Sue
      October 25, 2022
      Reply

      Thanks for your comment, Julian. Glad the feature was helpful. Regarding your own situation, Sean and Zahrah talked about SDLT on staircasing in resale homes in their previous feature on SO and SDLT. (https://www.sharedownershipresources.org/an-expert-on/shared-ownership-stamp-duty/)

      They said: “If the first purchaser made a market value election, the benefit ‘runs with the lease’ when it is sold on. So long as a market value election was made, and a statement is included within the lease itself to confirm, no further SDLT would be payable … on staircasing over 80%.”

      So you’ll need to check with your solicitor whether a market value election was made by the initial purchaser – and, if so, whether a statement is included within the lease itself – to confirm to see whether you will need to pay any SDLT on staircasing to 100%. Hope this is helpful.

  5. Ginny
    January 9, 2023
    Reply

    Hello, I contacted my solicitor who I used to purchase a 40% share in a shared ownership property some 21 years ago and they have said they do not have a record of this and cannot help me. I was shocked at their response.

    I told my current solicitor and they seem equally relaxed about it and said it looks as if I paid the full market valuation from the stamp duty stamp on the lease. Is there nothing like a certificate for this from HMRC or a record on file? It seems strange not to get confirmation from the solicitor who complete the purchase on my behalf.

    Thanks for your article and any help on this.

    • Sue
      January 15, 2023
      Reply

      Thanks for your query, Ginny. First off, it’s not at all unusual for solicitors not to keep files for 21 years. When it comes to residential conveyancing the Law Society don’t specify exactly how long files should be kept. But it seems that it’s good practice to keep sales files for a minimum of 6 years and purchase files for 15 years. Ultimately, the lease itself should be the key source of information.

      You mention that you bought your SO property some 21 years ago. Stamp Duty Land Tax (SDLT) replaced Stamp Duty 20 years ago, in 2003.

      Tax firm Cornerstone explains key differences between Stamp Duty and SDLT as follows: “Stamp Duty derived its name from the physical act of a stamp being placed on the title documents of the property to affirm that the duty had been paid – until this stamp was placed, the transaction was not deemed legally effective. SDLT retains the ‘Stamp’ part of the name despite the fact that stamping has nothing to do with the process; though you may still hear some solicitors and other property professionals talking about ‘stamping documents’, it no longer happens. SDLT also differs in that it is a self-assessed tax against the purchaser, rather than a tax on documents like the old Stamp Duty. The similarity in name has led to much confusion on the part of laymen and professionals since SDLT was introduced. To this day, many solicitors assume that SDLT operates in the same way as the old Stamp Duty, and are unaware of many of its inherent complexities as a result.”. (https://ctatax.uk.com/what-is-stamp-duty/)

      What does this mean for you? I’m afraid I don’t know. But I hope this information will help you have a more informed conversation with your own solicitors about the Stamp Duty stamp on your lease. Perhaps as to whether your original purchase was made under the previous Stamp Duty tax or the more recent Stamp Duty Land Tax (SDLT)? And, if the previous system, whether or not this gives rise to any complications given transitional arrangements from Stamp Duty to SDLT? (Hopefully not!)

      Please do let me know how you get on. I’d be interested to hear the outcome.

  6. Confused
    January 29, 2023
    Reply

    Hello, this is by far the best article on stamp duty and staircasing, much better than HMRC’s own guidance, so I feel in the right place to ask this question.

    I am about to staircase to 100%, from 60% – having simultaneously bought a 25% share as a resale from the previous leaseholder, and 35% from the housing association, in 2016.

    My current solicitor says that the transaction between me and the previous leaseholder does not count as a “linked transaction” for the purpose of SDLT – only the two transactions to the housing association (35% on initial purchase and the 40% final staircasing).

    I understand from the HMRC website that transactions can be linked not only if they involve the same people, but also if they are part of the same “scheme” or part of a series of transactions. I would assume that the fact that all three are for the same property, this would establish a link between the transactions.

    If only transactions 2 and 3 are linked, it means the apportionment of SDLT to the final staircasing transaction is greater (40 / 75 as opposed to 40 / 100).

    What is your opinion; would the transaction to the previous leaseholder count as a linked transaction?

    • Sue
      January 30, 2023
      Reply

      Hello ‘Confused’,

      I’m glad you found the article useful. Thanks for the feedback, and for your query. I’ve checked with Sean Randall and his view is as below.

      “75 (35 + 40) would be taxed as a single SDLT transaction and the remainder (25) would be taxed as a separate SDLT transaction. Whether this is a scheme (etc) within the meaning of the rules is uncertain but this is academic because the test has two limbs and your facts would fail the second limb. The second limb requires the parties (here the sellers) to be the same or connected persons. In this case, the seller of the lease is not the same as or connected with the housing association.”

  7. Confused
    January 30, 2023
    Reply

    Hi Sue!

    Thank you for your rapid response… and once again a much clearer response than I have received elsewhere.

    In that case, does that mean I overpaid SDLT on my first transaction? (ie simultaneous purchasing of 25% from previous leaseholder, and staircasing an additional 35% share on the same day)

    My solicitor at the time (2016) calculated the SDLT as if they were one single transaction. Total transaction on that date was £255k, SDLT paid £2,750.

    I want to satisfy myself that I am not paying the same SDLT twice.

    Best wishes,
    (Slightly less) Confused

  8. Lucy
    June 15, 2023
    Reply

    Hello! This is such a helpful article – thank you.

    I’m wondering if you can help advise on my situation.

    I’m looking to purchase 50% of a property worth £231,000 and I am a first time buyer. Will I need to pay stamp duty if I staircase to own 100% of the property in the future?

    Thanks so much for your help,
    Lucy

    • Sue
      June 16, 2023
      Reply

      Hello Lucy, Thanks for your comments. Glad the article was helpful.

      SDLT payable on staircasing to 100% depends, in part, on whether or not the first purchaser of the property made a ‘full market value election’. (It’s not clear from your query whether you’re buying a new build or a resale).. The first article in this 3-part series (Shared ownership stamp duty: purchase) should help you have an informed conversation with your solicitor about SDLT payable (or not) on staircasing to 100% – https://www.sharedownershipresources.org/an-expert-on/shared-ownership-stamp-duty/.

  9. Hugh
    June 27, 2023
    Reply

    Hello,

    Firstly, thank you for this brilliant article – really well written and very clear/helpful, just what I was after.

    I have a related question though that I can’t see dealt with elsewhere on the site and was wondering if anyone else has experience with and that’s what constitutes a ‘first time buyer’ for the purposes of staircasing/buying upto 100%?

    I am in a shared ownership flat – I Initially purchased 35% as a resale in 2016; staircased to 70% in 2017; and am now looking to purchase the remainder. I had thought (perhaps incorrectly) that I would still be classed as a first time buyer (as I’d never actually owned a property, only a share) and benefit from the GBP 425k stamp duty threshold, but a friend suggested this isn’t the case. I can’t see anything on the HMRC website defining what counts as a first time buyer – is this something anyone else has encountered?

    Any answers/pointers gratefully received!

    • Sue
      June 27, 2023
      Reply

      Thanks for your comment, Hugh. I’m pleased the feature was useful and I’ve passed on your feedback to Sean and Zahrah.

      With regard to your question, once shared owners have acquired an initial share in a shared ownership property (regardless of the size of the share) they lose first-time buyer status.

      SDLT on SO is complex. In my personal opinion, long-term financial implications of the two options – a market value election and paying in instalments – should be more clearly explained at the outset by both housing providers and solicitors.

  10. Hugh
    June 28, 2023
    Reply

    Hi Sue,

    Thank you for confirming, that’s a shame but at least I know where I stand now! And I completely agree – it feels like an area where there is definite scope for the potential SDLT implications could be more clearly highlighted at the outset. Thanks again for the time spent on this website though, it’s a hugely useful reference point.

    Thanks,

    Hugh

  11. Libby
    July 6, 2023
    Reply

    Hi there,

    I think my solicitor may have calculated my SDLT wrong. I was a first time buyer buying a 40% share of a property valued at £545,000. My purchase price was £218,000. As my purchase price was under the first time home buyers’ threshold I don’t think I should have paid any SDLT. However I was charged £2,571. My completion was on 29 July 2022, so am looking for answer quickly as if the relief was not claimed I only have till the 29th to do so.

    Thanks,

    • Sue
      July 10, 2023
      Reply

      Thanks for your query, Libby. And apologies for the delay in responding (which was due to a medical emergency).

      It’s not clear from the information provided whether your solicitor calculated SDLT on the full market value of your home (perhaps without first discussing the two different SDLT options with you….?) Sean has left you a voicemail.

      It would be great if you could post a follow-up comment once you’ve established whether or not you’re due a refund – as this could be helpful to other people in a similar situation reading these comments.

      • Sue
        July 17, 2023
        Reply

        Thanks for the update, Libby. Glad to hear there’s been a positive outcome!

  12. Libby
    July 17, 2023
    Reply

    Thanks, Sue,

    I opted to have my tax calculated on my share of £218,000 (rather than full market value). This was how the solicitor calculated it. However, they did not claim first home buyers relief as the market value of the property was over £300,000 (being £545,000). However, because I opted to pay based on my share being £218,000 (under the £300,000 threshold at the time) I was entitled to and should have received first time buyers relief. I am claiming it now and just thankful I discovered this within the 12 month period to be able to do so.

  13. Nicole
    August 1, 2023
    Reply

    Hello, I really love this article. It’s helped me a lot but I’m still not sure. It’s all a bit confusing isn’t it!!
    Hoping you might be able to give me some advice…This has been our staircasing ‘journey’…

    – Original Purchase
    Initial shares bought: 25%
    Completion date: 31/07/2017
    Initial premium: £77,500
    We elected to ‘pay’ by reference to the initial premium and not the full market value (something I now regret!!) .

    – 1st Staircasing and Remortgage
    Further shares bought: 30%
    Total shares now owned: 55%
    Completion date: 25/03/2019
    Premium for the share: £93,000
    No SDLT paid.

    – 2nd Staircasing and Remortgage
    Further shares bought: 35%
    Total shares now owned: 90%
    Completion date: 24/03/2021
    Premium for the share: £113,750
    *Please note this share was bought during the stamp duty holiday (covid). We did fill in a SDLT form but it has come to light just recently that my solicitor didn’t file the form to HMRC! They are submitting it now as late and will cover any fines that might be due!
    So no SDLT paid at the time due to the stamp duty holiday but a form has been filed for this staircasing.

    – 3rd / Final Staircasing and Remortgage
    Further shares being purchased: 10%
    Total shares now owned: 100%
    Completion date: TBC
    Premium for share: £37,000

    ***The advice I have been given is as follows…
    -The (third and) final 10% staircasing transaction will attract SDLT of £410 (37,000/321,250) x (250,000 @ 0% + 71,250 @ 5%).
    -The SDLT payable on the chargeable second staircasing transaction is recalculated and a further SDLT return is due as below:
    Second staircasing transaction 24/03/21 – additional SDLT payable £1,261 (113,750/321,250) x (250,000 @ 0% + 71,250 @ 5%). Nil SDLT paid on second staircasing transaction therefore £1,261 due within 30 days (of the final staircasing transaction) via a further return in accordance with s.81A FA 2003.
    – Accordingly, SDLT of £1,671 (= £410 + £1,261) is calculated to arise as a result of the final staircasing transaction.

    Do you agree with this?

    I don’t understand why we are having to pay stamp duty again on our second staircasing transaction when this was filed during a stamp duty holiday (albeit once our solicitor files the late form to HMRC)???

    Very sorry for the long message but I really hope you can help me!!! This is all very stressful!!

    • Sue
      August 1, 2023
      Reply

      Hello Nicole,

      Thanks for your comment and query. Yes, SDLT on shared ownership is complex. As you’ve discovered, even solicitors get things wrong so it’s not surprising you’re finding it confusing and stressful.

      Sean Randall has responded below. Sean is a Partner at Blick Rothenberg, has over 20 years’ experience advising on stamp duty issues and is the author of the leading textbook on stamp duty, In short, he is widely recognised as a leader in this field
      So it might be useful to signpost your solicitor to Sean’s view on this matter..

      I hope this is helpful. Please do let me know how you get on.

  14. Sean Randall
    August 1, 2023
    Reply

    Hi Nicole – the concept of revisiting the SDLT calculation in respect of an earlier transaction on the occurrence of a later linked transaction is correct. However, the mistake that your adviser has made, in my opinion, is using the rates in force at the final staircasing transaction when “trueing up” the SDLT due on the earlier chargeable staircasing transaction. They should have used the rates in force at the second staircasing transaction. As the nil-rate band threshold was £500,000 then, then no SDLT is payable on the second staircasing transaction, as the total amount paid is below this (£321,250). So you are right to challenge this.

  15. Tim Jackman
    August 7, 2023
    Reply

    Great article. I have an unusual situation where i purchased a 25% share in a £525k property in 2017 and paid SDLT of £1,968 on the share I purchased (plus some additional tax on the lease).

    I have since relocated overseas and let the property (with the permission of the authority) and have purchased an additional property overseas. I am looking to staircase to 100%, however have read mixed opinions online about whether the non-resident and second home surcharges apply on staircasing transactions.

    • Sue
      August 8, 2023
      Reply

      Thanks for your comment and query, Tim. Sean has responded below.

  16. Sean Randall
    August 8, 2023
    Reply

    Hi Tim – sadly I think both would apply. There’s an exception to the second home surcharge only where you have lived in the dwelling throughout the three years before the transaction. It sounds like this won’t apply. The non-resident surcharge may be refundable if you spend enough time here in the qualifying period after completion. Finally, the tax would not apply if you staircase in connection with a sale of the property.

  17. Shailesh
    August 30, 2023
    Reply

    Hi Team,

    After going through various links for SDLT calculations around shared ownerships, this forum seems to be the best one. Hence I would like to give a try for my question too. 🙂

    Question – I bought the first share of 50% of shared ownership property in 2020 and for SDLT payment, I chose the option to pay SDLT in stages. Now I’m staircasing to 100% with another buy of remaining 50% and since the property price is valued at £375k (50% share – £185k) so my understanding was that I would not be paying any SDLT as there is first time buyer relief for property where price is under £425k (after Sep 2022). But my solicitor has calculated the 5% of SDLT for the final 50% share (as per some table he posted where SDLT is 0 for property prices upto £250k and 5% for the prices from £250k – £925k. He also says I am no more entitled for first time buyer relief after the first equity purchase. And that didn’t seem correct to me as I am living in same property and don’t own any other property.

    I did call HMRC to clarify this and the lady on other side confirmed that I still remain as first time buyer as long as I am buying the shares in same property. But now my solicitor called HMRC as well and he was told the information as per his understanding and we are still not on the same page. I am sure there is a big disconnect here in understanding, I might need to understand it better for my satisfaction.

    Another thing which I am not clear of here is about “Full market value election” which I think can only be done during the initial purchase and I don’t think I did that because I chose to pay SDLT in stages.

    May I please request the experts here to help me in confirming whether I am supposed to pay SDLT or not! If not then at least I can live in hope of claiming it back directly with HMRC as I don’t see any chance of arguing this with my solicitor any further, also due for completion this week.

    Thank you in advance!

    Best Regards

    • Sue
      September 1, 2023
      Reply

      Thanks for your comment and query, Shailesh. It must be confusing if your solicitor and the HMRC Helpline appear to be offering conflicting advice. I have checked with Sean and Zahrah and their comments are as follows.

      You are correct that a full market value can only be done during the initial purchase (by the first buyer) and that, if you chose to pay SDLT in stages, the original market value option is no longer available to you.

      First time buyer status for the purpose of staircasing seems to be a common cause of confusion. Once shared owners have acquired an initial share in a shared ownership property (regardless of the size of the share) they lose first-time buyer status. Your solicitor is therefore correct in stating that you are no longer regarded as a first time buyer for the purposes of SDLT now that you are purchasing additional shares.

      I hope this is useful.

  18. A
    October 19, 2023
    Reply

    Hello,

    I bought a 60% share of a resale property worth £330k last year, as a first time buyer, As far as I am aware, the original owner did not make a full market value election.

    I would like to staircase to 100% in future, and am wondering if there is any financial difference between doing this over one or two stages in regards to SDLT?

    For example, if I staircased to 80% first and then to 100% later down the line, would I only pay SDLT on the final 20% share? Versus going from 60% to 100% and paying SDLT on 40%?

    Any help would be much appreciated!

    • Sue
      October 19, 2023
      Reply

      Thanks for your query. Per Examples 2 and 3 in the feature, the amount of SDLT you pay could be different depending whether you staircase in one or two stages. (As Example, 3 makes clear, being a first-time buyer wouldn’t make any difference, as first-time buyer status falls away after purchase of the initial share). Whilst the illustration provided here shows ‘Andy’ paying less SDLT via staircasing to 100% in 2 steps, bear in mind that he would have paid two lots of valuation and legal fees for staircasing purposes, so the benefit of lower SDLT would have been counteracted.

      Hope this is helpful. Obviously the illustrations here are intended to provide a guide to how SDLT operates in practice. But everyone’s situation is different. Please do take advice from your own solicitor as and when you decide to staircase. Good luck!

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