Can you delay paying stamp duty land tax?

Posted 31st July 2023 by ctatax-admin

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for stamp duty advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.

Stamp Duty Land Tax (SDLT) is a significant expense that homebuyers in the United Kingdom must consider when purchasing a property. As property transactions involve various financial considerations, the question arises: Is it possible to delay the payment of Stamp Duty Land Tax? In this blog post, we will examine the current rules surrounding SDLT payments, discuss potential scenarios where payment may be delayed, and explore the implications of such delays.

Read: How an annexe can save you thousands on stamp duty

Understanding Stamp Duty Land Tax (SDLT) Payment Deadlines: SDLT is typically payable within 14 days of the completion of a property transaction. The tax amount is calculated based on the purchase price of the property, with different thresholds and rates depending on the type of property and the buyer’s circumstances.

Current Rules and Penalties: The UK government has set clear guidelines for SDLT payments, with strict deadlines to ensure timely collection of tax revenue. Failure to pay SDLT within the specified timeframe may result in penalties, including interest charges and potential legal consequences.

Scenarios Where SDLT Payment May Be Delayed: While the standard expectation is to pay SDLT within 1414 days, there are a few situations where the payment may be delayed or varied:

1. Property Purchase with a Mortgage: In some cases, the buyer’s mortgage lender may handle the SDLT payment on their behalf. This arrangement can lead to a temporary delay in payment, as the lender organizes the necessary funds and pays the SDLT directly to HM Revenue and Customs (HMRC).

2. Contractual Agreements: Buyers and sellers may negotiate contractual terms that involve delaying the payment of SDLT. However, it is crucial to ensure that any such arrangements are compliant with legal requirements and do not breach tax regulations.

3. SDLT Reliefs and Exemptions: Certain SDLT reliefs or exemptions may allow for a partial or complete delay in payment. For instance, if a buyer qualifies for Right to Buy or Shared Ownership Lease Relief, they may be entitled to delay payment until they acquire an increased share in the property.

Implications and Considerations:

1. Potential Penalties and Interest: Delaying SDLT payment beyond the specified deadline can result in penalties and interest charges. It is important to carefully review the specific rules and regulations surrounding SDLT payment deadlines to avoid unnecessary costs.

2. Financial Planning and Cash Flow: While delaying SDLT payment may provide temporary relief, it is essential to consider the impact on overall financial planning and cash flow management. Buyers must ensure they have the necessary funds available when the payment becomes due.

Read: HMRC returns £30 million in overpaid stamp duty

3. Professional Advice: It is recommended to seek advice from legal and financial professionals, such as solicitors or tax advisors, to understand the potential consequences and explore alternative options for managing SDLT payment obligations.

Conclusion: In general, SDLT payments are expected to be made within 14 days of completing a property transaction. However, there are certain scenarios where payment may be delayed or varied, such as arrangements made with mortgage lenders or contractual agreements. It is crucial to understand the specific rules, regulations, and potential penalties associated with SDLT payment delays. Seeking advice from professionals can help ensure compliance with tax regulations and assist in managing financial obligations effectively. Remember to consult legal and financial experts to make informed decisions regarding SDLT payment timelines and to minimize any potential risks.

Cornerstone Tax is the UK’s leading property tax advisers, specialising in Stamp Duty Land Tax. We’ve reclaimed over £15 million in overpaid SDLT in the last 12 months. Contact us for stamp duty advice, or to see if you are eligible to claim a refund from HMRC on overpaid Stamp Duty.