Can you pay stamp duty in instalments?

Posted 01st August 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, many people wonder if it’s possible to pay Stamp Duty Land Tax in instalments. In this blog post, we will examine the current rules surrounding SDLT payments, discuss potential scenarios where instalment payments may be allowed, and explore the implications of such arrangements.

Read: How do I get a stamp duty refund?

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, expecting them to be paid in full within the specified timeframe. Failure to pay SDLT on time may result in penalties, including interest charges and potential legal consequences.

Scenarios Where Instalment Payments May Be Allowed: While the standard expectation is to pay SDLT in full within 1414 days, there are limited situations where instalment payments may be considered:

1. Negotiated Arrangement with HM Revenue and Customs (HMRC): In exceptional circumstances, such as financial hardship, it may be possible to negotiate an instalment arrangement with HMRC. This would require demonstrating genuine financial difficulties and providing supporting documentation.

2. SDLT Deferral Scheme for Commercial Property: For specific commercial property transactions, A purchaser may apply to defer the payment of SDLT where the chargeable consideration at the effective date is contingent or uncertain and is to be paid on one or more future dates of which at least one falls or may fall at least six months after the effective date of the transaction
Implications and Considerations:

1. Eligibility and Approval: Instalment payment arrangements for SDLT are typically considered on a case-by-case basis. Eligibility criteria, such as demonstrating financial hardship or meeting the requirements of specific schemes, need to be met. Approval from HMRC is necessary before proceeding with instalment payments.

Read: How much stamp duty will I pay in 2023?

2. Penalties and Interest: It is essential to understand that requesting instalment payments does not exempt buyers from penalties and interest charges. If an instalment plan is approved, any outstanding SDLT amount will still accrue interest until it is fully paid. It is important to meet the agreed-upon instalment schedule to avoid additional costs.

3. Professional Advice: Given the complexity of SDLT regulations and the potential implications of instalment arrangements, seeking advice from legal and financial professionals, such as solicitors or tax advisors, is strongly recommended. They can provide guidance tailored to individual circumstances and help navigate the process effectively.

Conclusion: While SDLT payments are generally expected to be made in full within 14 days of completing a property transaction, there are limited circumstances where instalment payment arrangements may be considered. Negotiated arrangements with HMRC or specific schemes, such as the SDLT deferral scheme for commercial property, can provide temporary relief and assist with managing cash flow. However, it is crucial to meet the eligibility criteria, obtain approval, and ensure compliance with the agreed-upon instalment schedule. It’s important to be aware that penalties and interest charges may still apply. Seeking professional advice can help navigate the complexities of SDLT regulations and provide tailored guidance. Remember to consult legal and financial experts to make informed decisions regarding SDLT payment options and obligations.

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.