STAMP DUTY CALCULATOR USER GUIDE by Jay Woods TAKEN FROM: www.stamp-duty-calculator.co.uk/user-guide
STAMP DUTY CALCULATOR USER GUIDE CHAPTER 1: Overview CHAPTER 2: Using the QUICK CALCULATOR widget CHAPTER 3: Using the FULL STAMP DUTY CALCULATOR CHAPTER 4: Using the FULL LBTT CALCULATOR (Scotland only) CHAPTER 5: Using the calculator on Facebook Messenger APPENDIX: Sample PDF Reports page 3
CHAPTER 1: Overview I created stamp-duty-calculator.co.uk as a powerful, fully featured, mobile-friendly, userfocussed stamp duty calculator designed to match the core functionality of the government's own stamp duty calculator, but to go further by outperforming the government's version in key user experience ( UX ) metrics. Those metrics amount to smoothing the input-gathering process at the start of each calculation, so as to do away with the click-and-wait experience of the government's site, and to enable the user to produce presentation-standard PDF reports that can be downloaded and printed off or emailed to clients or colleagues. Nevertheless, I also appreciated the need to provide an instant result service for the single most commonly required SDLT condition matrix: residential, plus, freehold or existing leasehold (as opposed to new leases), plus, private individual is the buyer. Those 3 conditions combined form the unspoken and exclusive basis for almost every single non-governmental stamp duty calculator out there. Unspoken? Yes. That's right. Not one of them bothers to tell you that their basic calculator only churns out results for the above 3-point condition matrix. COMPARISON OF TOP-RANKING STAMP DUTY CALCULATOR WEBSITES stamp-duty-calculator.co.uk gov.uk stampdutycalculator.org.uk moneyadviceservice.org.uk moneysavingexpert.com knightfrank.co.uk calculatestampduty.co.uk zoopla.co.uk which.co.uk private individual + freehold + residential private individual + leasehold + residential private individual + freehold / leasehold + non-residential company + freehold / leasehold + residential / non-residential PDF reports What's worse, a few of them - including some on the first page of Google - don't even perform that simple calculation precisely! But I digress. I said that I understood the need for the most common set of conditions (described above), and for that I created the QUICK CALCULATOR WIDGET. page 4
For the uninitiated, that's the mini calculator or floating widget or orange box near the top of the home page of the website. Its title is QUICK CALCULATOR and it explicitly states at the bottom that it is constrained to the popular 3-point condition matrix that all the rival sites offer. I will write more about it and its special features in Chapter 2. In the meantime, I'll briefly recap on the site's main calculator(s), those feature-rich options I spoke of at the start of this chapter. Namely, the fully featured stamp duty calculator and the fully featured LBTT calculator. Fully featured stamp duty calculator: Enables SDLT calculations on freehold, existing and new leases, and (in the latter case) showing Net Present Value breakdowns also; Allows you to work out results for private individuals buying or companies buying, and for residential or non-residential / mixed-use ; Fully adjustable summary table that allows you to make final tweaks to your input parameters before you hit the calculate button; Enables you to generate a downloadable PDF report detailing calculation breakdowns. The LBTT counterpart (for Scotland only, as LBTT is Scotland's equivalent of SDLT), is less expansive for the plain reason that LBTT's rules are not as complicated as SDLT's are. The LBTT calculator's features are: Enables LBTT calculations for residential and non-residential property acquisitions; Incorporates Additional Dwelling Supplement (where applicable); Incorporates linked transactions (where applicable); Enables you to generate a downloadable PDF report detailing calculation breakdowns. page 5
No capability for Scottish new non-residential lease transactions is available at this stage because of the extreme rarity of England-Wales-NI style leaseholds in Scotland. Finally, a quick word on colour schemes. Throughout, orange denotes SDLT / England, Wales and Northern Ireland, whereas green denotes LBTT / Scotland. In case you failed to notice, this dichotomy is reflected in: the website's logo, and, the background colours of the full calculators on the website's home page, and, the Quick Calculator Widget (when you toggle it between SDLT and LBTT), and, the downloadable PDF reports. page 6
CHAPTER 2: Using the QUICK CALCULATOR widget At the risk of being accused of repeating myself ad nauseam, the Quick Calculator Widget is just as the widget itself says - limited to the popular case of a transaction that entails: residential property, plus, freehold or existing leasehold (as opposed to new leases), plus, private individual as buyer. For more expanded or alternative conditions, you should use the appropriate Full Calculator (SDLT or LBTT). TO USE THE WIDGET: Step 1: Enter the price or consideration of the transaction in the input field where it says 'Price of the property' (see illustrations below). Step 2: Leave the checkbox blank if is is not a second home or a buy-to-let (BTL) transaction, or conversely, tick it if it is. NOTE: In Scottish transactions, ticking the checkbox would mean you are saying the entire property acquisition is subject to Additional Dwelling Supplement. Step 3: If the transaction is taking place in England, Wales or Northern Ireland, ensure the central toggle switch is aligned to the left, with 'SDLT' showing to its left. In this state, the Widget will be orange, that is, it will be in SDLT mode. However, if the transaction is taking place in Scotland, click or tap the toggle once to align it to page 7
the right. 'LBTT' will then appear to its right. In this state, the Widget will be green (LBTT mode). Do remember that, as SDLT and LBTT have different rates and bands, the tax due on a property purchase in Scotland will generally be different than an identically priced property in the rest of the UK. Accordingly, this Widget - and even more so, the Full Calculator(s) - are particularly useful where someone has to compare LBTT with SDLT, for example, in the case where a person is considering similar or equally priced properties either side of the England-Scotland border, Step 4: Click or tap on the QUICK CALCULATE button and the tax due will appear in the result bar. Beyond that, if you require a printable PDF report / detailed breakdown or alternative conditions for your calculation(s), you should click or tap on the GO TO FULL CALCULATOR button and the page will scroll down to the appropriate place. NOTE: If you need clarity on terminology / jargon, the website features a dedicated Stamp Duty Glossary page, which also allows you to download an ebook version of the glossary: https://stamp-duty-calculator.co.uk/stamp-duty-glossary page 8
CHAPTER 3: Using the FULL STAMP DUTY CALCULATOR Like pretty much everything else on the website, using the Full Stamp Duty Calculator should be an intuitively easy experience, so much of the following might seem to be statements of the staggeringly obvious. STARTING WITH THE INITIAL QUESTIONS: Click or tap on the START HERE button. The screen will then change to reveal the first of a brief series of questions, which you answer by ticking the appropriate checkboxes. Those questions are, in order: Question 1: Is the purchaser an individual or a company / trust? Question 2: Is the property residential (as opposed to non-residential or "mixed-use")? Question 3: Is it a freehold or leasehold transaction? REMINDER: If you need clarity on terminology / jargon, the website features a dedicated Stamp Duty Glossary page, which also allows you to download an ebook version of the glossary: https://stamp-duty-calculator.co.uk/stamp-duty-glossary page 9
FREEHOLD CALCULATIONS: If the answer to Question 3 is freehold, the options below will appear: Likewise, if the answer to Question 3 is leasehold, but you then choose existing lease, you will then see the same options as in the image above. If, however, the answer to Question 3 is leasehold and you choose new lease, you will be presented with a different set of options - see New Lease Calculations for details. Next Step: Enter the transaction's chargeable consideration or price where it says Price of the property. Next Step: Now enter the effective date below the price. EFFECTIVE DATE: Normally, in the context of SDLT, this will be the completion date. However, it may instead refer to the date of substantial performance, which means one of the following events occurs prior to the completion date: most (usually 90%) of the chargeable consideration is paid, or, the buyer by some legal means become entitled to assume possession of the property, or, the first rent payment (in the case of leasehold transactions) occurs. page 10
You can type the effective date in manually (in DD-MM-YYYY format) or you can use the dropdown date-picker: Next Step: Now tick the checkbox if the property is a second home or a buy-to-let dwelling. Otherwise, leave it unchecked. Next Step: At this stage, you can either start all over again (for example, if you realise you should have selected new lease instead of existing lease), or, assuming you are happy with everything you have entered so far, you can click or tap on the REVIEW > button, which will take you to the Pre-Calculation Summary. Next Step (Pre-Calculation Summary): Assuming you indeed clicked the REVIEW > button, you will be presented with the screen below, which provides a visual overview or summary of all the options you chose and the price and effective date you entered: page 11
This visualisation not only provides you with a summary of what you have input into the calculator, but also allows you to make final alterations before you proceed to calculate. You would make these changes primarily via the TOGGLE SWITCHES which appear to the right of each parameter on the summary table, as per the image above. For example, if you noticed that your transaction is described as residential, whereas it should have been non-residential, then you would click on or tap the toggle switch on that row to change it to non-residential. If, however, you notice that you made a mistake with either the price you entered or the effective date, you would use the < TWEAK button to jump back to the price and date step. Final Step (Calculation): Once you are satisfied that everything on the summary table is correct, you are ready to click on or tap the CALCULATE button. The calculation is immediately performed and the result displayed below the CALCULATE button (see image below). page 12
Along with the result is the option to generate a DOWNLOADABLE REPORT. This will produce a single page (in A4 format) printable and emailable PDF showing a breakdown of the calculation, detailing the relevant SDLT bands and rates entailed. To view some sample reports, see the Appendix at the end of this User Guide. page 13
NOTE 1: Different browsers and platforms may handle the display of the downloadable PDF report differently than in the image above. NOTE 2: Up until you use the CACULATE button, everything will have been handled by computations performed by your own browser (e.g. Edge, Firefox, Chrome, IE, Opera, Safari, etc.), using your own computer's processing power. The actual calculation, however, takes place on the website's own secure remote server, using proprietary code. The point being, you have to be online for the calculator to work. page 14
LEASEHOLD CALCULATIONS: If the answer to Question 3 in the initial questions sequence is leasehold, you will be asked a further question: Question 4: Is the leasehold new or existing? If your answer to this fourth question is existing, you will be taken through the same next steps as would be the case if you had answered Question 3 as freehold. However, if your answer is new (i.e. yours is a new leasehold transaction), you will be shown the following: Next Step: Enter the lease start and end dates in the appropriate places. Again, the drop-down date-picker is probably the easiest way to do this. Next Step: Enter the total premium payable; this is the lease premium. page 15
LEASE PREMIUM: This is the purchase price of a lease, whether a new lease or an assigned (that is, an existing lease, i.e., one that has not yet expired). Next Step: Enter the effective date and finally, tick the checkbox if the property is a second home or a buy-to-let-dwelling. Once all that has been done, click or tap on the PROCEED > button. You will then see the screen below, or a variation thereof, depending on the length of the lease, up to a maximum of inputs for five rental years. NOTE: Leases lasting longer than 5 years have their SDLT treatment based on parameters applicable to the first 5 years alone. page 16
Next Step: Fill out the rents for each year shown above. Final Step: When all the annual rents have been entered, click or tap on the FINAL STEP > button to proceed to the Pre-Calculation Summary, which looks like the image shown below: page 17
As is the case with the freehold Pre-Calculation Summary, you will be presented with a summary table with toggle switches to the right of each summarised parameter. And as before, you can use the toggle switches - and the < CHANGE button - to make final amendments to the data you have input into the calculator, prior to submitting everything for calculation. NOTE: For new lease calculations, you will see something called Net Present Value (NPV). NPV is a statistical representation of the value of your lease's future rent in today's monetary value. It is an exceptionally complex construct (by tax standards) and requires its own specialised, detailed treatment, which you can access here: https://stamp-duty-calculator.co.uk/netpresent-value SDLT is calculated on NPV separately from the SDLT on the lease premium, and then the two amounts of SDLT due are added together. The downloadable PDF reports for new lease calculations automatically show how these two components of the overall result are calculated. page 18
VIDEO DEMONSTRATION: There is a video demonstration of the Full Stamp Duty Calculator in action on my YouTube page. Click (or tap!) on the image below to view the video online. You can also view it on Facebook Messenger using the StampBot (see Chapter 5). page 19
CHAPTER 4: Using the FULL LBTT CALCULATOR (Scotland only) The Full LBTT Calculator is considerably simpler than the SDLT counterpart, simply because LBTT is not as convoluted in its rules as LBTT is. Most notably, it lacks the new lease calculation feature, due to English-style leaseholds being very seldom encountered in Scotland (as mentioned in CHAPTER 1). STARTING WITH THE INITIAL QUESTIONS: Click or tap on the START HERE button. The screen will then reveal the first of four questions, which you answer by ticking the appropriate checkboxes. Those questions are, in order: Question 1: Is the purchaser an individual or a non-natural person (e.g. a company)? Question 2: Is the property residential (as opposed to non-residential or "mixed-use")? Question 3: Is any part of the transaction liable to Additional Dwelling Supplement? Question 4: Is it part of a linked transaction? Depending on how you answered those 4 questions, you will then have to enter one, two or three figures prior to calculating the LBTT due. Let's now look at those 4 questions in detail. page 20
Question 1: Is the purchaser an individual or a non-natural person (e.g. a company)? The first question is merely designed to determine if the property acquisition is being undertaken by a private individual, as opposed to a company or other non-natural person. Question 2: Is the property residential (as opposed to non-residential or "mixed-use")? If the property being acquired is intended for someone to live in at some stage, as opposed to a commercial premises or a mix of commercial and residential, then tick the top box. Otherwise and obviously, tick the bottom box. Question 3: Is any part of the transaction liable to Additional Dwelling Supplement? If you are, for example, buying a second home in Scotland, all of the transaction will be subject to ADS. But be sure to read the two glossary definitions below in case your transaction includes an element that is not subject to ADS. ADDITIONAL DWELLING SUPPLEMENT (ADS): This is a simple, additional 3% in Land and Buildings Transaction Tax (LBTT) levied on the relevant consideration of any property transaction entailing the acquisition of additional dwellings, i.e., buy-to-let properties and second homes, of 40,000 or more. (Taken from the glossary: https://stamp-duty-calculator.co.uk/stamp-duty-glossary ) RELEVANT CONSIDERATION: If a house is bought along with, say, a commercial building or farmland, in one broad transaction, the relevant consideration is the amount that applies to the house alone, i.e., typically the price of the house. (Taken from the glossary: https://stamp-duty-calculator.co.uk/stamp-duty-glossary ) Question 4: Is it part of a linked transaction? The definition of linked transaction is substantial and should be read carefully before answering this question. page 21
LINKED TRANSACTION: Official documentation defines this as follows: "When 2 or more property transactions involve the same buyer and seller, they count as linked for SDLT." Note also that for SDLT / LBTT purposes a connected person may be construed as the de facto buyer and expected to pay relevant SDLT / LBTT accordingly. SDLT / LBTT is due on the total value of all linked transactions, which raises the prospect of the buyer paying a higher rate of SDLT / LBTT than would be the case if the transactions were not linked. Naturally, therefore, the government enjoins countermeasures against erstwhile remedies to circumvent the heavier levies on linked transactions - more on this in the final paragraph in this definition. If all the linked properties are residential, then their combined value is subject to tax at residential rates. However, if one, all, or any number between, of the linked properties are non-residential, then their combined value is subject to tax at non-residential rates. As mentioned above, the government has legislated to make it difficult for buyers to avoid the linked transaction treatment, so measures such as the buyer invoking proxies to purchase extra properties within a single scheme or project will still be construed as the original buyer buying them; likewise using separate contracts or attempting to divide the acquisition into disparate parts will be of no avail. (Taken from the glossary: https://stamp-duty-calculator.co.uk/stamp-duty-glossary ) For the sake of comprehensiveness, the example below shows the penultimate step for a linked transaction that is subject to ADS: page 22
Note that the ADS amount cannot exceed the price, and that the price cannot exceed the total linked transaction price. (Well, anyone who wants to be silly can try but the calculator will display error messages). Final Step: When everything has been entered, click or tap the CALCULATE LBTT button and the result will be displayed below it, along with the option to download a PDF report. page 23
CHAPTER 5: Using the calculator on FACEBOOK MESSENGER The website provides a very unique and special service on Facebook Messenger via the StampBot. The StampBot is an AI (Artificial Intelligence) chatbot that enables the user to access all of the website's features without leaving the Facebook ecosystem. Essentially, you interact with the StampBot by asking it questions related to stamp duty land tax, or to do with the other services the website offers, and it tries to help you. It has an in-built mini version of the Stamp Duty Glossary. But it also enables you to download the full glossary - and indeed, most of the free ebooks the website offers - from within Facebook Messenger. Perhaps most notably of all, it allows you to use the website's calculators from within Facebook Messenger. In sum, it adds a more personal, human enhancement to this site's core services. Click (or tap!) the image below to see exactly what I mean: page 24
To get started with the StampBot, you can visit my Facebook Page or use the Facebook Messenger icon on the main website. page 25
Appendix: Sample PDF Reports