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Stamp Duty and 'Linked Transactions'
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EA
Posted: 07 November 2012 15:00:49(UTC)
#1

Joined: 23/01/2012(UTC)
Posts: 52
I am in the process of purchasing a property for £250,000.00 which as I understand incurs a 1% Stamp Duty, we hope to exchange and complete this transaction in the next couple of weeks. After 12 months, we plan to purchase an acre of land for £20,000.00 which is next to the property. If we buy the land 12 months after completing on the property, will we incur the 3% Stamp Duty? There is nothing in a contract to say that we will do this, it is based purely on trust that the vendor will sell it to us.

Any help on this would be great!
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P L
Posted: 07 November 2012 21:33:06(UTC)
#2

Joined: 10/08/2008(UTC)
Posts: 356

Thanks: 12 times
Was thanked: 374 time(s) in 160 post(s)
If there isn't a contract that commits either of you to anything then I think it is a separate transaction. The risk is that HMRC decides that a transaction was deliberately split to avoid the tax, which I'm sure you going to be honest about - ie it's not a firm plan is it really, more you're just toying with the idea should on the off chance it come up for sale in the future.

Ref: http://www.hmrc.gov.uk/s...te/linked-transfers.htm

Am I correct is assuming your offer to buy the land along with the propery was unfortunately turned down as the owner didn't want to sell it (I'm sure their letter to that effect is carefully filed isn't it).

If the land is offered on the open market at some later time such that anyone could buy it and no evidence exists that the transaction had been linked then I would think HMRC would have a tuff time proving it was.







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1 user thanked P L for this post.
EA on 09/11/2012(UTC)
EA
Posted: 09 November 2012 13:17:03(UTC)
#3

Joined: 23/01/2012(UTC)
Posts: 52
Thanks for that P L, you have been most helpful with your comments. I had heard (which could be Chinese whispers) that there is a 12month period before the second transaction should take place otherwise it can still be deemed as a 'linked transaction', do you know where this may have come from and if this is the case?
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1 user thanked EA for this post.
Guest on 07/06/2014(UTC)
jeffian
Posted: 30 April 2013 16:39:12(UTC)
#6

Joined: 09/03/2011(UTC)
Posts: 954
Aye, but I think she was rather less interested in answering the question than promoting her website!

8-)
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EA
Posted: 01 May 2013 08:08:48(UTC)
#7

Joined: 23/01/2012(UTC)
Posts: 52
Thank you for your good intentions Natalie, although you didn’t really answer my question.

I have since spoken with my solicitor and she has said that I will incur the increased stamp duty of 3% which makes for a very expensive piece of land. It’s just frustrating for me as I have heard so much conflicting information and really need to be sure.
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Jeanette Holland
Posted: 07 June 2014 18:57:51(UTC)
#8

Joined: 07/06/2014(UTC)
Posts: 1
Was wondering if you ever had a solution to this problem, having the same problem so would really like some advice.
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