Deemed market value

Worked example for LBTT2007 Deemed market value where transaction involves connected company.

This worked example applies the LBTT rates and bands for residential transactions with an effective date prior to 15 July 2020 or after 31 March 2021 and the amount of tax shown is for illustrative purposes only.

Example:

A transfers a residential property to company B, for consideration of £170,000.

Chargeable consideration and tax payable where A is not connected with company B

A is not connected with company B in accordance with section 1122 of the Corporation Tax Act 2010. The chargeable consideration is the amount paid, in this case £170,000. The total tax payable is £500 using the current residential rates and bands.

Chargeable consideration and tax payable where A is connected with company B

A is connected with company B in accordance with section 1122 of the Corporation Tax Act 2010. Therefore it is important to know the market value of the property.

If the market value was £275,000 this would be the amount of the chargeable consideration as it is higher than the amount paid (£170,000). Based on a chargeable consideration value of £275,000, the total tax payable is £3350 using the current residential rates and bands.

If, however, the market value was £150,000, the chargeable consideration would be £170,000 as it is higher than the market value. Based on a chargeable consideration value of £170,000, the total tax payable is £500 using the current residential rates and bands.

Last updated: 
4 September 2020

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Updated date: 2016-04-14 10:30
Version ID: 583
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