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SDLT Updates

Autumn Budget 2017 

The Chancellor announced a number of changes to Stamp Duty Land Tax in the budget on 22nd November 2017. 

Further information is available on gov.uk at: https://www.gov.uk/government/collections/autumn-budget-2017-tax-related-documents

Below is a summary of the key points. ​

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SDLT: Relief for first time buyers

A relief for first time buyers of residential properties costing no more than £500,000. First time buyers will pay no SDLT on the first £300,000 of the purchase price, with the remainder being charged at 5%. No relief will be available where the total consideration exceeds £500,000. 

The relief is not time limited and will apply to transactions with an effective date on or after 22 November 2017. Legislation will be introduced in Finance Bill 2017 to 2018.

A guidance note is available on gov.uk, together with the draft legislation and explanatory note.

First time buyers can use the gov.uk calculator to work out their stamp duty land tax liability.  To claim relief code 32 should be entered at box 1.9 of SDLT return. If code 32 is entered on the online return, the return will calculate the tax due, except where the first time buyer is being granted a new lease.  In such cases the gov.uk calculator should be used to work out the tax due.

SDLT: Changes to the filing and payment process

Following the announcement at Spring Budget 2017, the SDLT filing and payment window reduction from 30 days to 14 days would be delayed until after April 2018. It has been confirmed that the changes will apply to land transactions with an effective date on or after 1 March 2019. Improvements are planned to the SDLT return which aim to make compliance with the new time limit easier.

Legislation will be introduced in Finance Bill 2018 to 2019. 

SDLT: minor amendments to higher rates

Minor amendments to provide relief in certain cases including –

  • where a divorce related court order prevents someone from disposing of their interest in a main residence,
  • where a spouse or civil partner buys property from another spouse or civil partner,
  • where a deputy buys property for a child subject to the Court of Protection,
  • where a purchaser adds to their interest in their current main residence.

Additionally, legislation will be provide to prevent abuse of relief for replacement of a purchaser’s only or main residence by requiring the purchaser to dispose of the whole of their former main residence and to do so to someone who is not their spouse.

The changes will apply from 22 November 2017. Legislation will be introduced in Finance Bill 2017 to 2018.

ATED: 2018 to 2019 annual chargeable amounts

The ATED annual charges will rise 3% from 1 April 2018 in line with the September 2017 Consumer Prices Index. A Treasury Order confirming the charges will be published shortly after Budget.

The new rates will be –

Property Value

Annual chargeable amounts for the 2017 to 2018 chargeable period  

Annual chargeable amounts for the 2018 to 2019 chargeable period

£500,001 to £1,000,000

£3,500

£3,600

£1,000,001 to £2,000,000

£7,050

£7,250

£2,000,001 to £5,000,000

£23,550

£24,250

£5,000,001 to £10,000,000

£54,950

£56,550

£10,000,001 to £20,000,000

£110,100

£113,400

£20,000,0001 and over

£220,350

£226,950

                                                                                                                                                                               

SD/SDRT/SDLT: Resolution of financial institutions

Legislation will be introduced in Finance Bill 2018 to 2019 to ensure that Stamp Duty, Stamp Duty Reserve Tax (SDRT) and Stamp Duty Land Tax (SDLT) are not chargeable twice on exercise of resolution powers under the UK special resolution regime for managing failing financial institutions.

The exemption will be limited to the temporary transfer of shares or land to a bridge entity and the transfer of shares in exchange for temporary certificates issued to creditors that identify their entitlement to the shares. This will simplify and strengthen the process of resolving a failed financial institution and help to ensure that the “no creditor worse off” principle is upheld.

The change will have effect on and after Royal Assent of Finance Bill 2018 to 2019.

SDRT: 1.5% charge on the issue of shares

The Government will continue to not apply the Stamp Duty and Stamp Duty Reserve Tax (SDRT) 1.5% charge on the issue of shares (and transfers integral to capital raising) into overseas clearance services and depositary receipt issuers following the UK’s exit from the European Union. 

Following a Court of Justice of the EU judgement in the case of HSBC Holdings PLC and Vidacos Nominee Ltd v Commissioners for HM Revenue & Customs (HMRC) (C569/07) and a subsequent First Tier Tribunal judgement in the case of HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs [2012] UKFTT 163 (TC), HMRC accepts that the charge is incompatible with the Capital Duty Directive.

GOV.UK publication sets out when HMRC does not collect Stamp Duty and SDRT in line with the rulings. 

 


Land Transaction Tax to replace SDLT in Wales 

On 3rd October 2017, the Welsh Treasury announced the rates and bands for the new Land Transaction Tax (LTT) that will replace SDLT in Wales from 1st April 2018. 

More detail

 


Spring Budget 2017 changes

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.

 

ATED/15% reliefs

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 BACSit’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.

SDLT on gov.uk