Stamp taxes (stamp duty, stamp duty reserve tax and stamp duty land tax): formula sheet

Key formulas

Stamp duty on shares

Duty = 0.5% × consideration, rounded up to the nearest £5

The 0.5% rate is in the tax tables. The rounding is not, so you must remember it.

Rounding rule

Round UP to the next £5 (an exact multiple stays unchanged)

Example: duty of £1,251 rounds up to £1,255. Duty of £1,250 stays at £1,250.

Small transfer threshold

Consideration of £1,000 or less (with certificate) = no duty

Above £1,000 the duty is on the full consideration.

Group exemption

Transfer between companies in a 75% group = relieved from duty, if claimed

It requires a 75% group relationship (ownership, including indirect, and beneficial entitlement). Relief can be withdrawn if the companies leave the group within 3 years of the transfer.

Who pays

Buyer (transferee) normally pays stamp duty

State this clearly when advising a buyer or a seller.

SDRT charge

SDRT = 0.5% × consideration for the agreement to transfer chargeable securities

The tax tables show 0.5% for stamp duty on shares. SDRT uses the same rate. Work out the tax on the price paid.

Stamp duty on shares (tax table)

Stamp duty on shares = 0.5%

This is the line you are given in the tax tables. Use it as the base rate for both taxes.

Stamp duty versus SDRT

Stamped transfer document → stamp duty; agreement with no document → SDRT

They are alternatives for the same deal. Do not add them together.

Who pays

Payer = the buyer (purchaser)

The transferee bears the tax on a normal purchase.

Non-residential SDLT slice rates

0% on the first £150,000; 2% on £150,001 to £250,000; 5% on the excess over £250,000

These are the rates in the ACCA tax tables for the exam. Apply each rate only to the slice of the price within that band.

SDLT on a price above £250,000

SDLT = (£250,000 − £150,000) × 2% + (Price − £250,000) × 5% = £2,000 + (Price − £250,000) × 5%

Quick form of the same calculation. It works only when the price is over £250,000.

SDLT on a price from £150,001 to £250,000

SDLT = (Price − £150,000) × 2%

Maximum is £2,000 at a price of £250,000.

Mixed-use rule

Mixed-use transaction: use the non-residential rates on the whole chargeable consideration

Do not split the price between the residential and non-residential elements.

Stamp duty on shares (for contrast)

0.5% of the consideration

Do not confuse this with SDLT. Shares attract stamp duty, not SDLT.

SDLT on non-residential lease premium

0% to £150,000; 2% on £150,001 to £250,000; 5% above £250,000

Slice rates from the ATX-UK tax tables (non-residential SDLT). Apply each rate only to the part of the premium in that band.

SDLT on rent

1% × (NPV of rent − £150,000), if the NPV exceeds £150,000

Nothing is due on the first £150,000 of NPV. The 1% rate and the £150,000 threshold are not in the ATX-UK tax tables. Take them from the question or from your knowledge of the legislation. The question also gives the discount rate, so follow its figures.

Net present value of rent

NPV = Σ annual rent ÷ (1 + r)^(n − 1), for years n = 1 to lease term

The first year's rent is not discounted. Use the discount rate in the question.

Total SDLT on a lease

SDLT on premium + SDLT on rent NPV

Compute the two parts separately and add them.

Return and payment deadline

Within 14 days of the effective date

The effective date is normally completion of the lease. Count 14 days from that date.

Standard penalties for errors (maximum)

Careless 30%; deliberate but not concealed 70%; deliberate and concealed 100%

Minimums depend on disclosure. Unprompted: 0%, 20%, 30%. Prompted: 15%, 35%, 50%. They apply to understated tax.

Quick revision

• Stamp duty applies to written transfers of shares; SDRT applies to agreements to transfer shares.
• The share rate in the tax tables is 0.5% for stamp duty.
• Stamp duty is rounded up to the nearest £5; SDRT is not rounded to £5.
• The buyer normally pays stamp duty and SDRT on shares.
• SDLT non-residential rates: 0% to £150,000, 2% from £150,001 to £250,000, 5% above £250,000.
• SDLT is charged in slices, not on the whole price at one rate.
• The purchaser or lessee pays SDLT.
• Example: £400,000 non-residential purchase gives SDLT of £9,500.
• If both stamp duty and SDRT would arise on the same deal, the charge is not paid twice.
• Check the question for exemptions before calculating any tax.
• Lease questions: use the rent and premium details and any rates given in the exam.
• Always state the tax, the working, who pays and the cost to the client.

Common mistakes

• Rounding down or to the nearest £5 Fix: Always round stamp duty up to the next multiple of £5.
• Charging duty only on the amount above £1,000 Fix: It is a threshold. Above it, duty is on the whole consideration.
• Charging both stamp duty and SDRT on the same share purchase. Fix: State that they are alternatives. One 0.5% charge applies to the deal.
• Saying the seller pays. Fix: The buyer is the person who normally pays. Say so in your answer.
• Applying one rate to the whole price Fix: Remember that the rates are slice rates. Tax only the part of the price inside each band.
• Using residential rates for a mixed-use property Fix: Treat a mixed-use transaction as non-residential and use the non-residential rates on the whole price.
• Charging 1% on the whole NPV of the rent Fix: Always deduct £150,000 first. Only the excess is taxed at 1%.
• Applying one band rate to the whole premium Fix: Treat the premium as slices. For example, on £300,000 the first £150,000 is nil, the next £100,000 is at 2%, and the last £50,000 is at 5%.

Exam tips

• Write the 0.5% rate and the £5 rounding as a labelled line in your answer. Marks are given for each step.
• Always say whether the transfer is paper or electronic. This is often the hidden decision in the question.
• If the question mentions companies, check for a 75% group link before computing anything.
• Give a short practical conclusion for professional skills marks, such as who pays and when the relief must be claimed.
• Always give the rate (0.5%), the base (price paid) and the payer (buyer). These are the three marking points.
• Say clearly that stamp duty and SDRT are alternatives for the same deal.
• Do not use SDLT bands for shares. Keep land and shares separate in your answer.
• When comparing a share purchase with an asset purchase, include the stamp tax cost as a numerical line. Show the working.