FLK2 · Property Practice

Property taxation (SDLT, VAT, CGT)

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

PP.10 Property Taxation — SDLT, VAT, CGT

Three taxes bite on property transactions. Get the buyer/seller split and the residential/commercial split right.

SDLT (Stamp Duty Land Tax) — the BUYER's tax

Charged on the chargeable consideration for a land transaction in England/NI (Finance Act 2003). (Wales = LTT; Scotland = LBTT — out of scope but know the names.)
Residential nil-rate threshold: £125,000, then banded rates rising on the slice. Higher rates apply to additional dwellings and to non-resident/corporate buyers.
First-time buyers' relief gives a higher nil-rate band (relief withdrawn above the FTB cap).
VAT is part of the consideration — SDLT is charged on the VAT-inclusive price for opted commercial property.
Filing/payment: SDLT return filed and tax paid within 14 days of completion (not 30). The buyer's solicitor handles this; SDLT5 certificate is needed to register the buyer at HM Land Registry.

VAT — mostly the SELLER's concern

Land/buildings are exempt by default, with exceptions.
Standard-rated (20%): new (≤3 years old) commercial buildings; the sale of a freehold "new" commercial building.
A landlord/seller of old commercial property can opt to tax to recover input VAT — this turns an exempt supply into standard-rated, adding 20% to price and to the buyer's SDLT.
New-build residential = zero-rated; most residential resales/lettings = exempt. A TOGC (transfer of a going concern, e.g. a tenanted investment property) is outside the scope of VAT if conditions met.

CGT — the SELLER's tax on the gain

Charged on the disposal gain. Residential CGT rates 18%/24% (basic/higher) since 30 Oct 2024; annual exempt amount £3,000.
PRR (private residence relief) exempts the gain on an only/main home (TCGA 1992 s.222–223); final-period exemption applies.
Reporting trap: UK residential property gains must be reported and CGT paid via a CGT-on-property-account return within 60 days of completion (separate from SDLT's 14 days).
Companies pay corporation tax on gains, not CGT.

Common traps

14 days SDLT vs 60 days CGT — different deadlines, different parties.
Option to tax inflates both VAT and SDLT.
Don't confuse "new" residential (zero-rated) with "new" commercial (standard-rated).

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A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash, which the woman is instructed by the club's rules to bank into the club's dedicated account within seven days. One month she receives £200 in subscriptions but, being short of money, uses the cash to pay her own gas bill. She intends to replace the £200 from her wages before anyone notices, and she does in fact pay an equivalent £200 into the club account two weeks later. The woman is charged with theft of the £200. Which of the following is the strongest basis for finding the property belonged to another at the time she used it?

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