The Law
The law states that Stamp Duty Land Tax (commonly known as Stamp Duty) is payable on the purchase of all properties above the value of £125,000, unless an exemption applies. But is Stamp Duty payable on extras on a New Build property?
What exactly is Stamp Duty payable on?
Stamp Duty is payable on the price paid for the property. With many residential properties, this is relatively straightforward. However, if you are purchasing a brand new property from a developer, the total price may not be as clear. This means that there may be further Stamp Duty to pay which you have not taken into consideration.
What is the position with New Build properties?
Many builders offer extra services or goods with the property to enable you to settle into your new home comfortably. You may wish to purchase from the developer extras such as a fitted kitchen, fitted furniture or even a conservatory or extension, which you will pay for when you purchase the property.
Stamp Duty is payable on fixtures and fittings which are considered to be attached to the building, such as fitted wardrobes or a kitchen. However, note that Stamp Duty is not payable on removable fixtures and chattels such as carpets and curtains.
The builder will report any extras of a financial value which you have decided to purchase to your solicitor. These optional extras will effectively increase the total purchase price and therefore the stamp duty which is payable on the property also increases.
EXAMPLE:
If you purchase a property for £150,000.00 and spend £5,000.00 with the developer on a fitted kitchen, stamp duty will be calculated on the total of £155,000.00.
What happens if I do not pay stamp duty on the extras?
Legally, you must declare the true and accurate purchase price of the property which includes the optional extras. If you do not do so, HMRC could investigate and you may face a future tax liability should the correct rate of stamp duty not be paid at the time of completion. You may also be faced with fines and penalties for failing to pay the correct amount.
If you are thinking of purchasing a new build property and would like to discuss Stamp Duty further, please contact our specialist new build property team today on 0113 244 9931.
