The last thing you need as you enter retirement is the shock of discovering that you might not have the income you’d assumed, thanks to unexpected tax bills.
Rules surrounding stamp duty land tax (SDLT) mean this could be the reality for many GPs when they come to sell their medical practice.
According to the British Medical Association, SDLT is likely to affect increasing numbers of GP practices in the future, as more occupy leasehold properties and property prices vary.
However, the way the tax applies to partnerships is a tricky area, and many GPs may be unaware they could be liable for significant tax bills.
As a broad introduction to the topic, we’ve covered some general points about SDLT in this blog, but it’s always best to seek professional advice before making any tax-planning decisions. After all, everybody’s situation is different.
SDLT is charged on land and property transactions over a certain value in England and Northern Ireland.
You may need to pay it if you buy a property, or if a property is transferred to you.
While transfers within partnerships are often exempt from SDLT, changes to partnership arrangements can sometimes trigger a liability.
Whether or not this is the case comes down to complex legal details regarding different types of partnership, and the specific types of ownership rights partners have.
If you are liable to pay SDLT, you’ll need to complete a land transaction return and submit it to HMRC, before paying the tax due.
When you buy a new non-residential leasehold you pay SDLT on both the purchase price of the lease, using the rates above, and the value of the annual rent you pay.
Other rules apply in Scotland and Wales, so contact us for more information on these areas.
If you’re nearing retirement and planning on selling your practice, it’s essential to consider SDLT and other taxes that might apply to you.
We provide specialist tax services for medical professionals and can help you plan for a smooth transition to retirement.
Find out more about our services for doctors and dentists or contact us at 020 8643 1166.