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First-time buyers' relief gives a higher nil-rate band (relief withdrawn above the FTB cap).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. For individuals, residential property CGT rates are 18%/24%: the higher residential rate fell from 28% to 24% for disposals on or after 6 April 2024 (Finance (No.2) Act 2024 s.6). The main rates for other gains rose to 18%/24% from 30 October 2024 (Finance Act 2025 s.7); special relief rates require separate checking. Gains within the unused basic-rate band attract 18%; the excess attracts 24% (TCGA 1992 ss.1H-1I). 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. Under the club rules she accepted on becoming treasurer, she must bank the subscriptions into the club's dedicated account within seven days. One month she receives £200 in subscriptions and spends the cash on her own gas bill that same day. She intends to replace the money from her wages before anyone notices, and pays an equivalent £200 into the club account two weeks later. Which statement best explains how section 5(3) of the Theft Act 1968 applies to the subscriptions when she pays the gas bill?

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