Property tax payment window cut

From 1 March the timescale for payment of stamp duty land tax (SDLT) in England and Northern Ireland has been cut in half.

Both residential and commercial property transactions now have only 14 days to pay SDLT.

The cut, down from 30 days previously, affects all property transactions in the two countries. The 14 days start from the ‘effective date’ of the transaction. The effective date is usually when the transfer is completed, but there can be circumstances where the majority of the contract has been ‘performed’ prior to completion.

Even where no tax is due, for example where a property is nil-rated at under £125,000 or there is another form of exemption, HMRC still requires a return to be filed within 14 days of completion of the transaction.

Once the 14-day window has closed, interest will begin to run on the charge and penalties will become due. The time limit applies to both UK and non-UK purchasers. If the return is filed late, the following penalties apply:

  • £100 if a return is filed up to three months after the filing date;
  • £200 if a return is filed more than three months after the filing date.

If a return is not filed within 12 months after the filing date, a tax-based penalty is also payable, which can be up to the full amount of tax due.

HMRC has said the process has been simplified and they believe the shorter window will increase efficiency. The majority of SDLT returns and payments have been completed within seven days during the previous 30-day window, so HMRC does not believe very many transactions would be adversely affected. Those dealing in more complex transactions, however, have expressed concern about the shorter time frame.

Individual purchasers are responsible for ensuring the tax is paid, though they are likely to have a solicitor or conveyancer acting for them. Where property is transferred as a result of an inheritance, or where no money or other payment is involved, or because of divorce or dissolution of a civil partnership, there is no SDLT charge to pay.

SDLT returns should be made electronically via HMRC. There are different forms for different types of transactions. There is still a 30-day window to apply for a deferral of SDLT, although the return in relation to any deferral must be filed within the new 14-day window.

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