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Is there stamp duty on a distribution in specie in a solvent liquidation?

The quick answer

It depends what the asset is and if it has a loan or mortgage on it. If it is a freehold property with no loan secured on it then there will be no Stamp Duty Land Tax (“SDLT”). The property is transferred to shareholders debt free after the members voluntary liquidation date.

In more detail

If there is no chargeable consideration (such as for a distribution in specie of a property)  there simply can not be a SDLT liability. 

If the property does have a loan secured on it then it makes sense to repay the loan first so it can be distributed to shareholders with no debt and with no SDLT payable. However, if the loan is from a shareholder (rather then any other lender such as a bank) then there may be no SDLT as well.

More detail can be found at the HM Revenue and Customs website link.

The process of solvently liquidating a company and transferring a property out to shareholders may also be done to de-envelope a freehold or long leasehold property. This will then avoid the Annual Tax on Enveloped Dwellings (“ATED”) charge which applies to residential property worth more than £500,000. 

We can help liquidate a company to avoid the ATED charge and give advice about the SDLT charges and how to legally avoid them. We also advise foreign owned companies with UK held property.

 

tip

If you need insolvency advice the earlier you talk to someone like us the better as you will have more options. We can help, contact us today.
We have just worked with Kirks to complete the closure of our company. Everything went smoothly and professionally. I would recommend this firm and the staff who were very very helpful and quickly finalised everything. Thank you Kirks.
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David Kirk

Licensed Insolvency Practitioner