Home > Stamp Duty > How to Avoid Stamp Duty

How to Avoid Stamp Duty

By: J.A.J Aaronson - Updated: 8 Feb 2013 | comments*Discuss
 
Stamp Duty Avoidance Evasion Avoid

Stamp Duty along with inheritance tax, is one of the great pariahs of the tax regime. While people will sometimes go to extraordinary lengths to avoid having to pay the latter, it is thought that there is little that one can do about the former. While it is true that there are fewer steps that can be taken to avoid Stamp Duty, there are a number of possibilities that might help.

Avoidance and Evasion

In the first instance, it is important to note the difference between 'avoiding' tax and 'evading' tax. This article, and several others on this site, offer advice on tax avoidance; this describes the ways in which individuals or organisations can legally minimise their tax bill. Tax evasion, on the other hand, is illegal, and tends to rely on acts like falsifying accounts. Actions like these are inevitably discovered and punished severely.

The majority of ways in which you can hope to avoid Stamp Duty tend to have a fairly fundamental effect on the transaction itself, often going as far as determining which property or shares you will buy. If you are hoping to minimise a Stamp Duty Land Tax (SDLT) bill (the duty paid on property transactions), one of the most enticing tax breaks available relates to property in so-called 'disadvantaged areas'. This is a scheme devised by the government to encourage the regeneration of less successfully developed areas by offering a tax incentive to those who purchase property there. Currently the non-payment threshold for SDLT is raised to £150,000 on property bought in these areas.

The HMRC and Directgov websites have search engines through which you can ascertain whether or not individual postcode areas are eligible for this form of tax relief.

Sale Prices

It sounds rather obvious, but perhaps the most effective way of mitigating your SDLT liability is by paying less for your property. If you can negotiate a price that is lower than the non-payment threshold (currently set at £125,000), you stand to save a considerable amount of money. Indeed, simply reducing the purchase price to below the threshold of any of the subsequent brackets can lead to large savings, particularly if the price drops below £250,000 as any sales of property above this price are subject to a minimum of 3% tax to a maximum of 7%.

While you are thinking about minimising your tax bill on property, it is also worth considering the tax implications that would apply were you ever to sell up. In this case, you should note that fixtures and fittings, as well as outbuildings like a garden shed, are classed as 'wasting chattels'. This means that they are exempt from Capital Gains Tax. As a result, you shouldn't be reticent about selling a ready-fitted house because of any potential tax expenses.

Share Transactions

Minimising your stamp duty liabilities on share transactions is virtually impossible. All such transactions are taxed at a flat rate of 0.5%, with no minimum threshold. However, you may find it easier to buy shares electronically. If you use the CREST system, the duty is automatically paid, meaning that you save time (and, potentially, money) that would have been spent on self assessment. For more information, read our article Stamp Duty on Shares.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • TheTaxGuide
    Re: How Will My Second Job Be Taxed?
    Belinda - Your Question:Hi. Looking for some advise. I work 32 hours a week at national living wage. I am looking to do a…
    17 July 2018
  • Sho
    Re: How Will My Second Job Be Taxed?
    I have three jobs (one is main other two are Locum) my total earning go above 70k/annum .The second and 3rd job has BR tax…
    16 July 2018
  • Belinda
    Re: How Will My Second Job Be Taxed?
    Hi. Looking for some advise. I work 32 hours a week at national living wage. I am looking to do a second job as a rep for a…
    16 July 2018
  • Daz2005
    Re: Should I be Paid Mileage Allowance?
    Should I pay my employees millage for commuting to and from the office in their own vehicle? Or do I just pay from the…
    12 July 2018
  • TheTaxGuide
    Re: How Will My Second Job Be Taxed?
    Peter - Your Question:Hi there, I am working permanent contract which says 37.5 hours weekly and 8.58 per hours. and I took…
    12 July 2018
  • Peter
    Re: How Will My Second Job Be Taxed?
    Hi there, i am working permanent contract which says 37.5 hours weekly and 8.58 per hours .. and i took second job recently…
    11 July 2018
  • TheTaxGuide
    Re: How Will My Second Job Be Taxed?
    LiamD - Your Question:I have two jobs but don’t earn over £11,850 per year so will I still pay tax? As I’m not over the…
    9 July 2018
  • JamieC
    Re: How Will My Second Job Be Taxed?
    I have been offered some temporary work. I work part time 10 hours a week at £9 per hour, the temporary work will be between…
    7 July 2018
  • LiamD
    Re: How Will My Second Job Be Taxed?
    I have two jobs but don’t earn over £11,850 per year so will I still pay tax? As I’m not over the threshold of my tax free…
    7 July 2018
  • TheTaxGuide
    Re: How Will My Second Job Be Taxed?
    Ree - Your Question:I have two jobs, I earn £25,000 in my full time and £6177 in my part time. I have been told that my tax…
    6 July 2018
Further Reading...
Our Most Popular...
Add to my Yahoo!
Add to Google
Stumble this
Add to Twitter
Add To Facebook
RSS feed
You should seek independent professional advice before acting upon any information on the TheTaxGuide website. Please read our Disclaimer.