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Sam, Accountant
Category: Tax
Satisfied Customers: 14196
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am buying a UK share of freehold flat, structured as the

Customer Question

I am buying a UK share of freehold flat, structured as the acquisition of a 120 year lease, and a share in the freehold management company (a standard UK LTD that owns the freehold title). The offer value is £900,000.

My question:
- SDLT on leasehold property is 4%
- SD on share purchases is 0.5%
- Could I structure this purchase as, say, £800k for the share purchase, and £100k for the leasehold? This would appear to be more tax efficient.
- If not, which regulations prevent me from doing so, and please can you link to them on the HMRC website?

Submitted: 3 years ago.
Category: Tax
Expert:  Sam replied 3 years ago.

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

Sadly not, as the purchase of the property itself will be subject to valuation, and this will throw up a huge gap between the Stamp duty paid for the property purchase and its actual value.
You will then have underpaid the correct stamp duty on which HMRC will identify with the false documents submitted

This will also be treated as evasion and carries heavy fines and penalties along with the stamp duty owed.

See link here re compliance checks

Link here for the Stamp duty manual
And specifically Chapter 4 which looks at the checks carried out.

All the legislation falls within the Stamp Act 1891