Members of community led housing groups could find themselves having to meet SDLT liabilities earlier than expected.

This scenario may arise for members of groups if they put a lot of their money into a group before they buy their property.

HMRC holds that Stamp Duty Land Tax (SDLT) is payable upon 'substantial performance' of a contract. 'Substantial performance' can be triggered by occupation or, crucially for community led housing groups, "where the purchaser has paid substantially all of the consideration specified in the contract". The rule of thumb is that this is where a member has paid 90% or more of the purchase price. The 90% figures is only guidance from HMRC and there will always be circumstances where less than 90% could still trigger a liability.

This means that if a member:

  1. enters into a contract with a group to buy a property and
  2. pays 90% or more of the purchase price to fund the group

then he or she could find they have triggered their SDLT liability. The payment of 90% does not necessarily have to be under the contract but could be by way of earlier, simultaneous or later loans to the group.