My client has agreed to pay £257,500 for the purchase of a new private residence.
The stamp duty charge at 3% is £7,725. If we can reduce the chargeable transfer to £250,000 the charge falls to 1%, being £2,500.
Can anyone offer advice on how this can legitimately be done? We are advised that no more than £5,000 can be allocated to chattels on the purchase.
The purchaser will not accept £255,000.
Steve
Replies (2)
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Bona fide apportionment
Steve, there is nothing to prevent you apportioning £7.5k to the chattels if this is bona fide.
Be careful!
You need to approach this with caution. The Stamp Office takes a very dim view of the parties to a transaction making a contrived apportionment of the purchase price to save stamp duty.
I note that the property is new. If the construction works have not yet been completed, it might be possible to save duty, and to render the transfer of the property eligible for the incoporation of a certificate of value for £250,000, by complying with the requirements of Statement of Practice SP8/93 in respect of "new buildings". However, one of the conditions for SP8/93 to apply is that the buyer takes a transfer of a partly completed building. Having regard to the amount of duty which is at stake, the client might not consider this to be worthwhile.