STamp duty on extras - New build

[STevep-4]

We are purchasing a new build house for 249,950. As we reserved the house during an early stage of build, we were able to specify some extras, such as power points, TV and phone points. In addition, we are having the builders install tiled flooring. This adds about £7000 to the price.
Also we have had a conservatory fitted by another company (save on VAT if completed before house purchae completion).

Would we be liable for 3% stamp duty on the property due to our extras??

[cranleys]

Steve

It would certainly appear so.

Could you not ask for these extras done on the day after completion?

Can they not throw these extra in for goodwill?

CD

[STevep-4]

If we used a sub contractor to do the tiling, that would not be covered by Stamp duty (same as carpet fitter, conservatory etc.).

SO why should we be charged if we contract the building company to do the tiling??

[STevep-4]

Here is the breakdown

House - £249,950

£4183 - Floor tiling (complete ground floor)
£1182 - (Electrical modification (extra phone, TV and power points, downlights)
£696 - (Alarm system)
£372 - Additional Kitchen cabinets

-£166 - (removal of kitchen worktops)


As far as we were aware, options should not be covered under stamp duty, since we could have had any of them done by sub contracttors prior to completion date.

It seems wholly unfair if this will result in a £5000 tax penalty.

Fortunately we have not had the tiles fitted (The builder themselves are using a subcontractor for this...maybe we can contract them directly...). We may be able to "talk" to the builders regarding the extras we have specified.

[STevep-4]

I spoke with solicitors and the Inland Revenue themselves about this matter.
The whole issue falls under the Finances Act 2003, Section 50, Schedule 40, paragraph 10.

If additional work is carried out by the vendor or associates, that is considered to be adding to the value of the transaction, therefore the whole sum is considered to be "chargeable consideration" and the higher stamp duty would be payable.

We have spoken to the builders. They will supply and invoice us for a "standard" property (as in the original contract).
All the "option" work will now be carried out by contractors after direct negotiation with ourselves. We will pay the contractors privately. Therefore there will be no risk of "chargeable consideration".



The gentleman at the Inland revenue (who strangely already had the Finances Act 2003 book open on the stated page) informed me that they are looking very closely at SDLT forms which are around £250,000. In addition, my solicitor tells me they have 6 years to consider each case and that the fines for infringement can be very steep indeed.

I would suggest that anyone in a similar position takes advice from their solicitors re this matter. In the end, it is the responsibility of the purchaser to make declarations on the SDLT form, not the solicitor.