The Chancellor announced new measures relating to SDLT in the 2016 Budget on 16th March and confirmed other measures. These include changes to non-residential SDLT rates and bands, effective from midnight on 16th March 2016, and the additional 3% rate for additional residences that was announced in the 2015 Autumn Statement and will take effect on 1st April 2016.
More details on those two measure and others announced in the budget are set out below with links to relevant guidance on the HMRC website.
SDLT: Non-residential Rates and Bands
The Government introduced new rules to calculate SDLT on purchases of non-residential property which complete on or after 17 March 2016. This includes purchases of mixed residential and non-residential property. The relevant SDLT rate for freehold and leasehold transactions will be payable on the portion of the consideration which falls within each band as follows:
£0 to £150k 0%
over £150k and up to £250k 2%
over £250k 5%
For the rental element of leasehold transactions, a new 2% rate band will apply where net present value is above £5 million. Legislation will be introduced in Finance Bill 2016.
The online calculator on gov.uk has been updated with the new rates.
The Stamp Taxes helpline is on 0300 200 3510.
SDLT: Additional 3% rate
As confirmed at Budget 2016, the Government introduced higher rates of SDLT on purchases of additional residential properties, such as second homes and buy to let properties. The higher rates are 3% above the standard rates of SDLT, payable on the total price paid for the property. The higher rate does not apply to purchases under £40,000.
Download the amended guidance issued byHMRC in November 2016
See www.hmrc.gov.uk for further information including the online calculator.
SD/SDRT: Deep in the money options
The Government will introduce legislation to stop avoidance of stamp duty and stamp duty reserve tax (SDRT) where 'deep in the money' options are used to transfer shares to a depositary receipt issuer or clearance service. Shares transferred to a depositary receipt issuer or clearance service as a result of the exercise of an option will now be charged the 1.5% higher rate of stamp duty or SDRT based on either their market value or the option strike price, whichever is higher. A technical consultation ran from 9 December 2015 to 3 February 2016. Legislation will be introduced in Finance Bill 2016. The changes take effect from 23 March 2016 under a Provisional Collection of Taxes Act resolution (for SDRT) and a section 50 Finance Act 1973 resolution (for SD) and apply to options which were entered into on or after 25 November 2015 and exercised on or after 23 March 2016.
SDLT: seeding relief
The Government will introduce a new relief from SDLT ('seeding relief') and make changes to the SDLT treatment of Co-ownership Authorised Contractual Schemes (CoACSs). Seeding relief will relieve the initial transfer of properties into Property Authorised Investment Funds (PAIFs) and CoACSs, to remove barriers to investment in these funds. A consultation ran from 18 July 2014 and 12 September 2014. Legislation will be introduced in Finance Bill 2016. The changes will take effect from the date of Royal Assent to the Finance Bill 2016.
As confirmed at Budget 2016, the Government will extend the scope of the reliefs available from ATED and 15% higher rate of SDLT to companies owning residential property under an equity release scheme (i.e. a home reversion plan); properties occupied by certain employees; or acquired for demolition or conversion into non-residential use. Legislation will be introduced in Finance Bill 2016. The changes will take effect from 1 April 2016 under a Provisional Collection of Taxes Act resolution.
Do you file paper SDLT Returns?
One in four paper SDLT returns contains errors needing SDLT 8 to correct them. This wastes the conveyancer’s and HMRC’s time. Think about moving all your SDLT filing online – the system helps avoid such errors.
Paying SDLT by cheque?
Make sure you are sending it to the right address to avoid delays in processing your payment.
Check the address for postal payments.
Alternatively, move your payments online or through BACS – it’s quicker and easier.
Changes coming up
The Welsh Assembly Government continues to work on plans for the replacement of SDLT in Wales with a Land Transaction Tax which looks likely to come into effect in April 2018. We will bring you more detailed information as it becomes available.
HMRC have informed us that paper SDLT 5s will lose their watermark at some point in spring 2017 when supplies of watermarked paper are exhausted. Paper copies will be issued on plain paper after that point.