ACCA Advanced Taxation (ATX) Practice Exam

What is the stamp duty charge threshold in relation to consideration?

1. No stamp duty if consideration exceeds £1000

2. No stamp duty if consideration is less than or equal to £1000

3. Stamp duty is always applicable

4. Stamp duty is charged on all transactions

The correct answer is: No stamp duty if consideration is less than or equal to £1000

The threshold for stamp duty in relation to consideration is set at £1,000. This means that no stamp duty is charged if the consideration for a transaction is less than or equal to this amount. The rationale behind this threshold is to exempt smaller transactions from the administrative burden of stamp duty, which is generally seen as a tax on the transfer of property and certain other transactions. This threshold allows for a degree of relief for individuals engaging in lower-value transactions, enabling them to avoid the costs associated with stamp duty that could make such transactions financially burdensome. Therefore, any transaction with a consideration amount of £1,000 or less is exempt from this tax, making the distinction clear in terms of when stamp duty becomes applicable. In contrast, transactions with a consideration greater than £1,000 are subject to stamp duty, and the tax is charged on the entire value of the consideration above that threshold. This distinction underscores the importance of understanding the financial implications of property dealings, as well as the administrative responsibilities that may arise depending on the consideration amount.