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Taxman targets homebuying cheats

Thinking of buying of house and avoiding an upper band of stamp duty? Think again

Homebuyers who try to avoid paying the full amount of stamp duty face a new regime from December 1.

Stamp duty land tax has now replaced stamp duty and it requires homebuyers to complete a self assessment form called the Land Transaction Return.

The tax thresholds remain the same but the move is a response to homebuyers paying over the odds for fixtures and fittings in return for the sale price being kept below a stamp duty threshold.

The taxman now has the power to insist that buyers who it suspects of evading the tax must pay the full amount. Buyers and sellers could also face a fine and interest charges.

The good old days

Here's how homebuyers used to get round the stamp duty thresholds:

Scenario one: buy a house for £520,000 and you would pay stamp duty of 4%, which is equivalent to £20,800.

Scenario two: buy the same house for £499,999 and then pay the owners an extra £20,001 in cash for the fixtures and fittings (such as curtains, fitted furniture, stand-alone kitchen etc). The owners receive the same total amount as in scenario one but you as the buyer pay 3% stamp duty on £499,999 which is equal to £15,000 - that's a saving of £5,800.

Now the taxman has nine months to scrutinise the amount you pay for fixtures and fittings so your best bet is to pay a fair amount for these. In most cases your solicitor should take on the extra work of ensuring the correct forms get to the Inland Revenue but failure to file will incur an automatic £100 penalty.


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Schedule of Articles

property investing
property refurbishment
buying overseas property
moving house
home letting
buy to let
home improvements

top 10 celebrity areas
6 up & comming areas
5 signs that an area is up & comming
city types yearn for the country in town
your place in the sun
equity release
planning permissions & extensions
estate agents
rent or buy
buy to let
mortgage overpayment
mortgage endowments
mortgage protection
stamp duty
self build your home
electrical surveys
the cost of moving in
the perfect neighbourhood
council tax
house price league
good neighbours
stamp duty land tax
top 20 towns 2003
cut the cost of moving
interest rates
buying in scotland
dream homes
first time buyers
the worth of uk homes
bad estate agents
keeping up appearances
home improvements


Please note that articles on this site & any other 'planning-approval' related web site does not constitute professional advice. All articles are intended to provide a general view of many subjects. We suggest you to consult a solicitor before making any important decisions.  The author is not an expert in any given field.

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