How is the chargeable consideration determined where the price includes fixtures and fittings and the seller gives a cash incentive?
“Since our deal has been completed on the above purchase (June 2016) it has come to our attention that we may have been advised to pay the incorrect amount of stamp duty.
According to the HMRC website, Stamp Duty is paid on ‘Chargeable Consideration’. As a result, incentives do not form part of chargeable consideration but in fact should be deducted from the purchase price of the house, therefore reducing the Stamp Duty payable. We received £7,900 as an incentive from Bovis and we also had the incentive of the house being fully tiled and carpeted. I believe both of these costs should have been deducted from the price paid in order to arrive at the chargeable consideration.
Please could you confirm if you are in agreement and if so please could you tell me how we begin the process of claiming back part of this overpaid Stamp Duty?
The property was purchased from Bovis for £515,995. The price in the transfer was as per the agreement. The agreement was a purchase price of £515,995 – part exchange property for £330,000 and £185,995 cash. There was a buyer’s retention towards the SDLT of £7,900.”
Source: BLG Member
The chargeable consideration is the consideration given by the purchaser for the land transaction. Unless the incentive was a price reduction (rather than an inducement to enter into the contract to buy the property or to move in early) it would not be deductible from the £515,995 figure to arrive at the amount on which SDLT was chargeable. If it was a price reduction the figure in the contract and in the Land Registry form TR1 should have reflected this. From what you say that does not seem to have been the case.
Where an amount is paid partly for a land transaction and partly for a non-land transaction such as the purchase of chattels, the price should be apportioned between them on a just and reasonable basis. Again it will depend on the terms of the deal. Carpets will normally be chattels but not tiles which are fixtures and therefore part of the land.
To claim a refund the original form SDLT1 should be amended – this can be done within one year of the filing date. Information on how to do this is here.
At the time of publication this response was correct however as tax legislation and practice change from time-to-time you should take specific advice before taking any action.
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