Author Topic: Stamp Duty, tax avoidance  (Read 11604 times)

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pat

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Stamp Duty, tax avoidance
« on: October 27, 2011, 09:23:32 am »
Hello,
Just to make it plain at the start I do not want to evade tax but:
We are selling our house and buying a new one through the same estate agent at around the £250, 000 mark. I have read before that it is illegal for us to offer to pay the vendors estate agent fees in an effort to keep the price below the SDLT threshold however I have a plan.

What if we changed our contract with the estate agents to pay a large commission on our sale and suggest the estate agents change their contract with the vendor of our new home so they pay a low commission? It seems materially different to actually paying the fees of the vendor but has the same effect.

Let me know your thoughts,
Patrick


Philofacts

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Re: Stamp Duty, tax avoidance
« Reply #1 on: October 27, 2011, 10:18:23 am »
What you need to do is get or keep the price you are buying at or reduced to below £250,000.  
Just a £1 over and you will pay £5,000 more in stamp duty.
If the vendors demand £1000 or more than £250,000 you would be better giving them it as cash to save the extra Stamp Duty.
Avoiding Stamp Duty is perfectly legal and everyone should do all they can to keep this unfair tax to an absolute minimum.

As you are not a first time buyer you will have to pay SDLT at 1% of the purchase price (approx £2,500) - there is no escape!

Dont worry about involving the Estate Agents with varying the commission - you will end up in a real mess with that one!
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pat

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Re: Stamp Duty, tax avoidance
« Reply #2 on: October 27, 2011, 10:24:31 am »
Thanks for the quick reply. Our problem is that someone else is offering over £250 on the house; we're in a better position to move, we're not going to match the other offer but it looks like we'll need to go over £250 to have a chance...

Philofacts

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Re: Stamp Duty, tax avoidance
« Reply #3 on: October 27, 2011, 10:28:10 am »
You really need to point out to the (greedy) vendor that the extra they now want, will mean anyone buying is going to give £5,000 and a bit more to the government in EXTRA Stamp Duty.   This is madness!

If you really want the house then I would offer the difference in cash outside the main transaction, for fixtures and fittings say carpets and curtains, which are not liable for SDLT.
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Convey With Me

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Re: Stamp Duty, tax avoidance
« Reply #4 on: October 31, 2011, 12:21:02 pm »
Hi There,

You have to be very careful in using fixtures and fittings, it could open you and the vendor up to problems in the future.  It's not legal and most solicitors will not agree to it. 

However, you do have the option of Stamp Duty Land Tax Mitigation.  It is a legal processed based on the current legislation which allows you to mitigate the Stamp Duty on property over 250K.  It's a very specialist process so not all law firms will have the knowledge or experience to undertake the conveyancing with the planning. 

At Convey With Me, we work with UK Tax Planners offering a robust solution to the planning, backed by council's opinion.  We work with a panel of law firms who have the expertise to do the conveyancing along side the planning.  All parties are provided with an independent insurance policy underwritten by Lloyd's of London.  Buyers save up to 52% on Stamp Duty.  This equate to £4,680 on a purchase of just 300K!  The savings increases the higher the purchase price.   

If you are buying over 250K, give me a call or send me an email and we can look at the opportunity to fit your specific purchase.  Please mention Brand New Homes so we know how you heard about our services.  I look forward to speaking to you!

Sonja MacGregor:  Tel:  0191 645 2868  E: sonja@conveywithme.com 

Philofacts

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Re: Stamp Duty, tax avoidance
« Reply #5 on: October 31, 2011, 01:07:32 pm »
The mitigation loopholes could well be closed soon.
People should go into this with their eyes wide open.
You could still end up paying the tax years down the line.
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FirstTimeBuyerGuru

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Re: Stamp Duty, tax avoidance
« Reply #6 on: November 02, 2011, 01:40:47 pm »
I certainly agree with Philofacts,

If something's too good to be true...it generally is! If it really was easy to avoid paying thousands in stamp duty then everyone would. I find it interesting that everyone's happy to perform tax avoidance with property, but if you offered the same for people's PAYE then they'd probably shy away feeling they'd get locked up!


Sadie20

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Re: Stamp Duty, tax avoidance
« Reply #7 on: November 03, 2011, 07:55:39 am »
People do avoid Income Tax!
There are millions of self-employed people living below the poverty threshold that are buying brand new cars and taking foreign hoildays.