Connected persons SDLT (2 property purchases) - stamp duty

[AP2023]

I have found this information on Gov.uk about purchasing a property and splitting it (my Ltd company buying a separate title and myself and partner buying the house next door). We are trying to work out stamp duty and need some advice please.

Stamp Duty Land Tax transactions that count as linked​

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.
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Does this include Directors of a Ltd company or is this for LLP/Sole traders/partners only? Not sure if I have to pay the stamp duty on the whole purchase of the two properties or it can be split between personal and business purchase as I am a sole director of my company which would be buying the commercial property next door to the house I am purchasing.​

Thank you for taking the time to read.

 

[kulture]

I would suggest that you take professional advice. Details matter, for instance are you buying both properties from the same person? Will they be purchased at the same time? What do you plan to do with the properties, you mention splitting, how does that work with two properties?

It may be beneficial to talk to a professional tax advisor about not just the purchase but also with regards to what you plan to w. Saving some stamp duty may conceivably cost you more in capital gains or some other tax further down the line.

 

[AP2023]

I would suggest that you take professional advice. Details matter, for instance are you buying both properties from the same person? Will they be purchased at the same time? What do you plan to do with the properties, you mention splitting, how does that work with two properties?

It may be beneficial to talk to a professional tax advisor about not just the purchase but also with regards to what you plan to w. Saving some stamp duty may conceivably cost you more in capital gains or some other tax further down the line.

I have done. I am looking further into it here aswell.

Yes, buying from the same person.

Yes, purchased at the same time.

Will live in the house.
Will run business from the commercial property.

The commercial and residential is currently being sold as one property. During conveyancing, looking to split titles as they are two obvious premises (has no shared accesses, has own boundaries). Business premises to be purchased by my Ltd co, house to be purchased by me and partner personally.

 

[Gyumri]

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.

Does this include Directors of a Ltd company or is this for LLP/Sole traders/partners only? Not sure if I have to pay the stamp duty on the whole purchase of the two properties or it can be split between personal and business purchase

You or the Ltd can't avoid the sdlt so whether it is paid by the Ltd or split seems to make no difference as to the amount payable but as @kulture has said, you need to get advice on the transaction as a whole for tax purposes.

I would agree that a director of an Ltd is not a connected person but I can't see how that helps if the whole sdlt has to be paid anyway by somebody. - whether it is split or not.

The scheme is obviously designed to prevent people clubbing together to buy property and saying that they don't have to pay the tax because their individual purchase payment is less than the minimum required for sdlt.

 

[AP2023]

You or the Ltd can't avoid the sdlt so whether it is paid by the Ltd or split seems to make no difference as to the amount payable but as @kulture has said, you need to get advice on the transaction as a whole for tax purposes.

I would agree that a director of an Ltd is not a connected person but I can't see how that helps if the whole sdlt has to be paid anyway by somebody. - whether it is split or not.

The scheme is obviously designed to prevent people clubbing together to buy property and saying that they don't have to pay the tax because their individual purchase payment is less than the minimum required for sdlt.

Thanks for the reply.

So if I was to split the 2 titles for the properties, the solicitor doing conveyancing would pay SDLT for the whole purchase as a mixed resi/business SDLT rate rather than seperating the SDLT between the 2 titles meaning that half would be payable on residential and the other half paid for by the Ltd company? - If this is the case, how would I work out what part of the SDLT I could allocate under ltd co asset cost expense? - If it was able to have been split originally it would have made the business side under the threshold for SDLT but as it couldn't be split, it actually raised the total amount for the house/whole lot by £15,000.

Sorry, hope that makes sense.

 

[kulture]

I would suggest that you talk to a good tax expert and get them to talk to your solicitor.

you want as an individual to buy a residential property, and you want your company to buy a commercial property. Currently this is a single property on the land register.

A good tax expert may be able to suggest a way to structure the deal, and split the freehold at the right time, to minimise or even eliminate stamp duty. A typical conveyance solicitor may not know all the options and may just take the easy way out and you end up paying the higher figure.