In the Budget of December 2003, major changes were made to the way that stamp duty is paid in the UK . Fixtures and fittings may now be taxable, but there are still a number of alternative ways to avoid stamp duty...
Make full use of 'chattels'
Chattels may be purchased from the vendor as part of a property transaction, provided the items are 'movable' and therefore stamp duty does not apply. Carpets are regarded as chattels because they can be lifted from the floor and removed, but fixed flooring cannot be moved and is taxable. Any deliberate attempt to reduce the selling price of a property to avoid stamp duty is likely to get you into hot water.
Buy a property in a DDA (Designated Disadvantaged Area)
There are hundreds of DDAs in the UK , including deprived areas in city centres. When a DDA applies there is no stamp duty on residential properties sold for under £151,000. In the case of commercial property, no stamp duty applies regardless of value.
Buying more than one property from the same vendor
When buying two or more properties from the same company there is a likelihood that the transaction will be regarded as 'linked' for stamp duty tax purposes, even if there is a time gap between each transaction. However, there are circumstances when there is no linkage and no extra stamp duty.
Buying a property to sell on
You normally have to pay stamp duty when you buy a property and then when you sell it the new buyer will have to pay stamp duty again. However, if you buy a property and sell it on before completing the purchase, then you, the buyer, pays no stamp duty. When selling 'back-to-back' you must not live on the premises, not have possession of the keys, and not carry out any maintenance or repairs.
Russell Eaton is the author of How to Avoid Stamp Duty published by taxcafe.co.uk
