Stamp Duty Land Tax and Stamp Taxes Online

Stamp Duty Land Tax (SDLT) came into effect on the 1st December 2003 replacing Stamp Duty which had been in place since the 17th century. Stamp Duty was a voluntary tax and involved stamping the legal documents with the amount of tax paid.

The introduction of SDLT helped close the tax gap by making the tax enforceable for the first time. The definition for SDLT is

'Stamp duty land tax is a modern self-assessed tax on land transactions involving any estate, interest, right or power in or over land in the United Kingdom.'

As part of the conveyancing process agents (usually) complete an SDLT tax return, giving:

  • effective date of the transaction;
  • purchase price of the property, and
  • a calculation of the SDLT payable.

In the majority of transactions within the UK a purchaser will appoint a practitioner to act on their behalf. However the purchaser remains liable for the information submitted to HMRC and for the tax due.

Once successfully submitted to, and verified by, HMRC Stamp Taxes the practitioner receives a Revenue certificate (form SDLT 5), which will be used to register the property at the appropriate Land Registry.

For the vast majority of transactions such as residential conveyances, completing the return and sending it to HMRC Stamp Taxes along with the appropriate payment is the only requirement.

The land transaction return is made up of 4 forms:

SDLT 1 - To be completed for all transactions, as described above;

SDLT 2 - Where the number of either purchasers or vendors is greater than two;

SDLT 3 - Where there is more than one property address or title number;

SDLT 4 - A multi-purpose form and is used for the following:

  • Non-residential transactions;
  • Company details;
  • Lease details;
  • More than one lease address or title number.

Each return has a unique reference number, so photocopies cannot be used. Paper copies can be obtained by telephoning the Orderline at St Austell.

Data on an SDLT 1 is checked by our IT systems. If anything appears missing or one piece of data contradicts another shown elsewhere on the return, an SDLT 8 letter (requesting further information) is sent. It is advisable to try to avoid this happening, as it delays issue of the SDLT 5 certificate.

As part of modernising the Stamp Duty programme, HMRC Stamp Taxes developed an online filing system to streamline the business processes in July 2005. Online returns can be submitted over the Internet using either the HMRC product or those of commercial software suppliers.

Whilst paper returns are still accepted, the undoubted advantages of online filing have seen take-up rise to almost 40 per cent.

Top reasons to file online

1) Electronic Revenue certificate SDLT 5

The electronic SDLT 5 revenue certificate is delivered online, usually within moments of successful submission. It can be printed off and sent to the appropriate Land Registry immediately (along with the necessary documents) for registration. Early submission of your online application will also help agents to lodge their application with Land Registry within the priority period of any protecting official search. This means customers will never have to:

  • wait for SDLT 5s in the post again
  • chase-up certificates at HMRC

2) No SDLT 8 letter requesting further information

Online filing guarantees that practitioners will never receive an SDLT 8 letter asking for further information. The built-in validation means a return cannot be submitted unless all the necessary questions have been answered.

3) Fast and efficient

Notifying online is by far the speediest method of completion. Built-in validation and on-screen guidance means users only answer questions and complete forms (viewable in bite-size pieces) applicable to their specific transaction.

4) Immediate submission

Once a user has successfully completed their return online, they simply click the ‘submit’ button and it is filed online.

5) Saves time and money

Online filing can also can save practitioners time and money in other ways:

  • The risk of penalties for late submission of returns can be substantially reduced. Forms can be prepared pre-completion and submitted immediately after completion has taken place. Payment of tax due can follow on-line submission.

  • Agents do not need to keep large stocks of up-to-date paper forms and, if they use the automatic Unique Transaction Reference Number (UTRN) generation facility, they do not need separate supplies of paying-in slips.

  • There is less need to telephone the Stamp Taxes Helpline or refer to SDLT 6 guidance notes, as interactive help is available on fields, with drop down menus for various codes.

If you would like any assistance with online filing, please contact Rachel Varndell or by telephone on 07710 021 169 who will be more than happy to discuss the work of our Outreach Team, which provides a tailored SDLT advice service.

Further information about Stamp Taxes online and the electronic SDLT 5 revenue certificate.