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What are Land Transaction Returns and SDLT?

What are Land Transaction Returns and SDLTSometimes, certain documents require payment of SDLT to the HMRC within 30 days of completion of transaction. This article discusses the method of payment and other details regarding SDLT.

SDLT is to be paid only on the value of the land and not on chattels. The rates are different for different types of values of property. Not paying these taxes makes the person liable for fines and penalties and the client (along with his conveyancing solicitor) may have to face charges. With effect from December 1 2003, it is no longer required for deeds to carry a stamp proving the payment of tax. This system is now replaced by SDLT. A land transaction return through Form SDLT1 is now required to be submitted for every transaction. This contains the details of the transaction along with information about the parties involved. Although it is the buyer who is personally responsible for the payment of these taxes, it is his solicitor who carries out the job for the client. The form is however signed by the buyer unless there is a power of attorney authorizing his solicitor to sign on behalf of the buyer.

The SDLT1 Form along with payment of tax is submitted to the HMRC Rapid Data Capture Centre in Netherton, Liverpool.  The deed is not submitted, but the form is signed and scanned. A certificate issued in SDLT5 Form is then shown to prove that the returns have been submitted and the tax has been paid. It is important for this certification to be obtained to allow the transaction to be registered under the Land Registry.

This return can also be filed online with the official HMRC website, http://www.hmrc.gov.uk/so/online. When SDLT5 is applied for by post, it is returned in the same manner, thereby causing a delay before the transaction could be registered. When submitted online, it is important for the conveyancing solicitor to prove the form is approved by his client before submission. This approval can be through any medium as far as HMRC is concerned. But it makes sense if the buyer’s conveyancing solicitor obtains permission through writing. Once this is done, the actual payment of tax can be made online or cheque sent by post.

Photo courtesy: Doug Kerr

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