What fresh hell is this??

[Ihavethesecret]

Thought my friend was joking when she said as a tenant I'd need to pay STAMP DUTY. Wtaf!
www.chancellors.co.uk/resource-centre/useful-information-for-tenants/stamp-duty-land-tax-for-tenants

Because I've been renting a while I HAVE TO PAY TAX ON MY RENT. I might just as well give up now
residential tenancies have the potential to be liable for Stamp Duty Land Tax (SDLT). The SDLT threshold was raised in March 2005 to £120,000 and in March 2006 to £125,000. SDLT is a tax levied on tenancy transactions, paid by Tenants and is calculated on the amount of gross rent for the term of the tenancy less a pre-set discount (Temporal Discount Rate) (currently 3.5%).

@Gwenhwyfar

I saw an article in the Guardian about this. Anyone paying this much rent can afford to buy surely? (I realise you may not want to buy at the moment).

Mum’s neighbour is self employed so hard to get a mortgage

Also I think he had hopes of reconciliation with his wife though after four years I presume that’s done.

I can see people getting caught in this. Interesting that it’s not on the Shelter website.

What?

I had no idea of this either.

A family renting in London could easily pay more than that a month.

It’s 1% over £125k paid in rent on any one property. Change properties and the count goes to zero. So £100 for every £10k spent on rent. Ergo a monthly rent of £1k would cost £10 more a month.

' If a tenant takes a one year tenancy and exercises an option to renew for a further year, this will be considered by the Inland Revenue to be a linked transaction and the NPV calculation will be based on the gross rent paid for both years. '

!!!!

Anyone paying this much rent can afford to buy surely?

Hollow laugh

Ah. If that's 7 years (not indefinitely) than fair enough.

It works out as a small amount though, realistically.

Say you pay £3k a month to rent a family home for 5 years. That means you pay £180,000 rent, leaving you liable.

There is a 3.5% discount, taking you to 173,700. The tax is 1% of the difference between this and £125,000 - so 1% of 48,700, which is £487.

The minimum to attract the tax would be paying £1542 a month for 7 years (or more per month for a shorter time period, on the same contract).

@Gwenhwyfar

I saw an article in the Guardian about this. Anyone paying this much rent can afford to buy surely? (I realise you may not want to buy at the moment).

Think about this for a moment. With house prices what they are in London yiu could easily be paying £1500 for a one or two bed flat. If you're paying that in rent how do you think your savings are looking if you are not on a high income. Given that deposit are now a min 10%.

Maybe you just don't know any better but broad statements like this with no thought are really irritating.

The tax liability is 1% of the difference between (total rent - 3%) and £125k. If you paid 2k/month rent and didn't move for 7 years you'd have a tax bill of £389.

How are the tax people going to know about this? They dont have access to how much rent you are paying or whether you rent or pay a mortgage unless you tell them.

@SchrodingersImmigrant

Ah. If that's 7 years (not indefinitely) than fair enough.

I don't think rolling over 7 years is "fair enough." It's "much less bad than continuing to accumulate", but not fair enough.

What on earth is the point of this tax?

I can only see that it is to penalise renters for not moving frequently.

It's not as if it's going to incentivise renters to somehow pay cheaper rents, cos if that were possible they'd already be doing it!

Oh god, we've been in our property for 7 years, I didn't know we'd be liable to be taxed for something that we don't own!

You would pay that tax on buying leashold (which is basically pre paying rent in some way. I am not a fan) as well. It's not to penalise renters. It's lile saying it penalises owners for moving. It's taxing an interest in a property which amounts over certain value. Anyone who pays for interest in a property with the interest valued above the threshold pays it. Whether they rent or own.

I would absolutely agree with it being very wrong if it affected lifelong terms though because then it would just keep popping up and not just a 1 off small sum. That would be quite concerning considering where lifelong tenancies are ususal lile social housing and this would be adding and adding.

@Kljnmw3459

Oh god, we've been in our property for 7 years, I didn't know we'd be liable to be taxed for something that we don't own!

Did you pay more than 125k total rent? If not, then don't worry

But people paying the tax are not buying leasehold.

And it does penalise renters in expensive areas who don't move frequently.

How is this enforced?

And no it's nothing like buying a leasehold.

Ok, I looked to it slightly more and apparently if your rent has had an increase then the calculation starts over? So we should be ok I hope.

blackandwhiteaccounting.co.uk/renting-dont-get-caught-stamp-duty/
very odd
so the same property gets charged twice by HMRC
Please LL pay higher stamp duty anyway (3% over the normal rate)
apparently this goes back to 2003 - but you only (!) get charged on the figure over the £125000 not on the £125000.
I have never heard of this (I will check the NRLA out of curiosity)