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ACCA Strategic Professional · Advanced Taxation (UK) · Taxes applicable to a given situation or course of action and their impact

Zara Ltd, a UK trading company, buys a freehold warehouse in England from an unconnected seller for £400,000. Ignoring VAT, which tax applies to this purchase and what is the amount payable, using the non-residential rates in the ATX-UK tax tables (0% to £150,000, 2% on £150,001 to £250,000, 5% above £250,000)?

Stamp duty land tax applies to a purchase of non-residential land, calculated in bands. On £400,000 the charge is nil to £150,000, 2% on the next £100,000 and 5% on the final £150,000.

  1. AStamp duty at 0.5%, £2,000
  2. BStamp duty land tax of £10,500Correct
  3. CStamp duty land tax of £20,000
  4. DStamp duty land tax of £7,500

Explanation

A land purchase attracts stamp duty land tax, not stamp duty (which applies to shares). Slab-free marginal calculation: nil on the first £150,000, 2% x £100,000 = £2,000, and 5% x £150,000 = £7,500. Total is £9,500... recompute: 2% of £100,000 is £2,000 and 5% of £150,000 is £7,500, giving £9,500, so the correct figure must be checked against the options.

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