On the 1st of December 2003, a stamp duty land tax (SDLT) on a leases clause was introduced. It was said tenants may have to pay a 1% tax on any rental payments above £125,000. If the tenants don’t pay they could face penalties for non-compliance, which could include £100 for filing a return up to three months after the filing date, £200 for filing a return more than three months after the filing date, or the full amount of tax due if you fail to file your return within 12 months.
HMRC have confirmed this is a seperate stamp duty payment to that paid by landlords when they purchase a property to rent it out. HMRC confirms that where the total rent paid exceeds £125,000, 1% SDLT should be applied and paid for by the tenant. The HMRC Leasehold Sales on Stamp Duty Land Tax guidance makes reference to both a five-and seven-year time frame for SDLT due. If a lease is treated as a ‘successive linked lease’ then there will be no time limit so the SDLT will be due whenever the threshold has passed. ‘Successive linked lease’ means where a tenancy agreement is renewed by the same parties, e.g- the same tenant and the same landlord also with the same terms e.g- fixed rent etc.
If you are in a house share all the tenants are liable to pay and the amount due will be shared between the tenants.
Angela Davey, ARLA Propertymark President said: “Whether this clause is included in a tenancy agreement depends on which market the agent is working in, as high value rents only tend to be applicable in certain cities across the U.K.”
The 1% tax would typically be paid within 30 days of the start of the date or the date the lease was excited, whichever comes first. This would be done through an SDLT1 form.