Ingleston Market not John Lewis!

Everyone likes to save a few quid and as the price of property begins to rise and the new LBTT (formerly SDLT ne Stamp Duty) cuts deeper into a buyer’s budget, clients are again looking at ways in which they can legitimately reduce their exposure to LBTT.

You need to be careful though, as the Revenue are on to all the scams. The Revenue take the view that it is illegal to evade the tax liability but legitimate tax avoidance seems to be fair game. I have come across many ingenious plans suggested by my clients over the years.

Here are a number of things that you will not get away with:-

• Reducing the price of the property by buying the garage separately

• Buying the house and then buying the garage shortly after.

• One spouse buying the dwelling house and the other buying the garage

• Buying the seller’s car as part of the deal

The main way that the LBTT can be legitimately mitigated is by buying the bricks and mortar/heritage separately from the moveables. You need to be careful as any transactions that are close to the various thresholds is likely to be scrutinised by the Revenue.

The two most important things that you need to be aware of are as follows:-

• The items have to be moveable – can you remove the items easily? Carpets are generally seen as moveable but nobody is going to take the boiler and the radiators – unless your being repossessed that is!

• The value of the items has to be realistic – it is not the value of the items as new – it is what you would pay for them second hand. Imagine what you would pay for them at Ingleston Sunday Market not John Lewis!

If you do decide that you want to apportion moveable items you really should be looking at making a specific list of moveable items to be included in the missives and also getting a proper valuation of these items. A fag packet calculation really doesn't cut it with the Revenue.

You should also be aware that there are a small number of transactions which do not attract stamp duty. John Swinney and his cohorts have been gracious enough to accept that if you are transferring title following a relationship split then LBTT is not an issue. Arguing over that Deacon Blue album however may be!

Here are a list of exemptions taken from the revenue's website

https://www.revenue.scot/land-buildings-transaction-tax/guidance/lbtt-legislation-guidance/exemptions-reliefs/lbtt3002

I have only touched the surface of this complicated area which also includes anti - money laundering issues, public policy arguments, lender’s requirements, solicitors duties and responsibilities. If you are considering trying to reduce your LBTT, it would be a good idea to speak with me and I will ensure that we keep you on the straight and narrow.

One final thought raised by a client recently that I had not considered. With the increase in LBTT, would you be better spending the LBTT on an extension and stay put? Have the government shot themselves in the foot?