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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10635
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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I am buying a house which has a separate double garage in

Customer Question

I am buying a house which has a separate double garage in west London and in time, given planning permission want to build a one bed flat above it. The purchase price of the house includes the garages. The house is over £1m and therefore will attract stamp duty at 10% on the top slice as well as the extra 3% as we own 2 properties. We would like to purchase the garage on a separate contract to the house and through my company so we are in effect buying 2 properties. Our hope is that in doing so we will be reducing the top slice of stamp duty and setting up the garage development as a new business.
Will we need 2 purchase contracts to do this? Is there any clause in the tax law which prevents us from using this route?
Submitted: 1 year ago.
Category: Law
Expert:  Aston Lawyer replied 1 year ago.

Hi,

A very good question!

For SDLT (Stamp Duty) purposes, if 2 transactions are "linked", then SDLT on the aggregate amounts are payable.

When 2 or more property transactions involve the same buyer and seller, they count as ‘linked’ for SDLT. HM Revenue and Customs (HMRC) may count people connected to a buyer or seller as being the same buyer or seller.

If 2 or more transactions are treated as linked then the buyer pays any SDLT due on the total value of all linked transactions.

HMRC counts transactions as linked if:

  • there’s more than one transaction
  • the transactions are between the same buyer and seller or between people connected with either of them
  • the transactions are part of a single arrangement or scheme or part of a series of transactions

Connected persons-

A connected person could be your relative, for example your brother, sister, parent, grandparent, husband, wife or civil partner - or one of their relatives.

If the buyer or seller is a business, a connected person would be a business partner and their relatives. It also includes companies and groups of companies who are connected to the business.

therefore, I am afraid to say that your transactions would be deemed to be linked, and hence no saving on SDLT will be possible.

Sorry this is not the answer you were looking for. I am afraid that there are no legal loopholes to get round this, and no doubt your Solicitor will confirm this to you.

Kind Regards

Al

Expert:  Aston Lawyer replied 1 year ago.

Hi, can I assist you any further? If not, I would be grateful if you could rate my answer. Kind Regards Al