SDLT Updates

14 July 2020

Changes to Land Transaction Tax in Wales

The Minister for Finance and Trefnydd has announced today changes to the land transaction tax rates and thresholds that will become effective from 27 July 2020 until 31 March 2021. The timing will tie up with further restrictions being removed from the housing market that currently prohibit the viewing of residential properties that are occupied (that is, a person currently lives there).

The main rates zero rate threshold is being lifted to £250,000 removing the first tax band (£180,000-£250,000 charged at 3.5%).

The Welsh Government has, however, decided to make no changes to the rates and thresholds that apply to the higher rates residential property transactions (HRAD for SDLT and ADS for LBTT).

A Written Statement has been issued by the Minister for Finance and Trefnydd.

The rates and thresholds that will apply in Wales from 27 July until 31 March next year are set out in the final page of the statement. Those for higher rates residential property transactions are added for clarity as they are not changed.

8 July 2020

Summer Economic Update

The Chancellor of the Exchequer has announced temporary increases to Stamp Duty Land Tax nil rate bands for residential property.  The new rules increase the nil rate band from £125,000 to £500,000 in the tables covering standard purchases and purchases where the consideration consists of or includes the net present value of the rental element for leasehold acquisitions. For purchases liable to the Higher Rates for Additional Dwellings, the 3% band is increased from £125,000 to £500,000.

The measure applies to transactions that are completed or substantially performed between 8 July 2020 and 31 March 2021 inclusive. The temporary rates do not apply where the transaction was substantially performed before 8 July 2020.  This page on GOV.UK contains more information – https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates and below I’ve included the new tables that apply for the period.

For purchases other than `higher rates` purchases –

For the net present value of the rental element for leasehold acquisitions –

For higher rates for additional dwellings purchases –

11 March 2020

Budget 2020

The Chancellor announced a number of changes to Stamp Duty Land Tax and Annual Tax on Enveloped Dwellings in the budget on 11 March 2020.

Further information is available on gov.uk at: https://www.gov.uk/government/publications/budget-2020-documents/budget-2020

The Overview of Tax Legislation and Rates (OOTLAR) can be found here

Stamp Taxes and ATED policies are as follows:

Non-Resident Stamp Duty Land Tax Surcharge on Purchases of Residential Property
The government will introduce new rates of SDLT for purchases of residential property by non-UK residents made from 1 April 2021. The surcharge will apply at a rate of 2% above the residential rates (including the higher rates for additional dwellings and companies, the 15% rate and the first time buyers’ rates).

The government will consult on draft legislation over the summer and introduce the change in the 2020/21 Finance Bill.

Further details can be found at paragraph 2.35 of the Budget document and paragraph 2.44 of the of Overview of Tax Legislation and Rates document.  We anticipate a consultation responses document being published within the next few weeks which will set out the detail of the Government’s decisions.

Annual Tax on Enveloped Dwellings (ATED) and the 15% rate of Stamp Duty Land Tax (SDLT): Relief for Housing Co-operatives
The government will introduce new reliefs from ATED and the 15% rate of SDLT for housing co-operatives.  The government will consult on draft legislation over the summer and introduce the change in the 2020/21 Finance Bill.

Further details can be found at paragraph 2.35 of the Budget document and paragraph 2.45 of the of Overview of Tax Legislation and Rates document.

Annual Tax on Enveloped Dwellings (ATED): 2020/21 Annual Chargeable Amounts
The ATED charges will increase by inflation for the 2020/21 chargeable period.

Further details can be found at Table 2 of the of Overview of Tax Legislation and Rates document.

The table below shows the annual chargeable amounts within each property band for the 2019 to 2020 period and the increased amounts for the 2020 to 2021 chargeable period, which begins on 1 April 2020.

Transfer of unlisted securities to connected companies for Stamp Duty and Stamp Duty Reserve Tax
Draft legislation was published on 11 July 2019, for consultation, and remains unchanged. Further details can be found at  paragraph 2.34 of the Budget document and Table 1 of the  of Overview of Tax Legislation and Rates document.

We are intending to circulate draft updated Guidance covering the new legislative in the next couple of weeks

HM Land Registry digitisation funding
This is not an HMRC measure, but you may also like to note that the Government has committed £42m of funding to allow HMLR to continue with its ongoing project to digitise land registration in England and Wales and enable further innovation in the property market (para 2.13 of the Budge document).

30 October 2018

Autumn Budget 2018

The Chancellor announced a number of changes to Stamp Duty Land Tax in the budget on 30 October 2018.

Further information is available on gov.uk at: https://www.gov.uk/government/collections/budget-2018

Below is a summary of the key points. ​

SDLT – First-Time Buyers’ Relief and Shared Ownership

Relief for first-time buyers will be extended to purchases of qualifying shared ownership property where the purchaser chooses not to make a market value election but to pay SDLT in stages.

Where the market value of the shared ownership property is £500,000 or less, the SDLT rates for first time buyers will be applied to the first share purchased. Relief will also apply to the rental payments.

Purchasers who make a market election are already eligible for the relief.

The changes will take effect on 29 October 2018 and will apply retrospectively from 22 November 2017.

A refund of tax can be claimed if the effective date of the purchase was on or after the 22 November 2017, a return was filed and SDLT paid as if no relief was due and the purchase would now qualify for first time buyers’ relief. Refunds for SDLT paid on the rent can also be claimed by purchasers who have made a market election.

SDLT – Higher Rates of SDLT for Additional Dwellings (“HRAD”)

The time limit for claiming a repayment of SDLT will be extended for customers who pay HRAD on the purchase of a property which they intend to be used as a main residence, and who subsequently sell their previous main residence.

A claim must be made:

• within 12 months of the sale of the previous main residence, or
• within 12 months of the filing date of the SDLT return for the new residence, on which HRAD was paid,

whichever comes later.

The changes apply for transactions which attract HRAD where the old main residence is sold on or after 29 October 2018.

The definition of “major interest” is also amended for the purposes of HRAD to make clear that it includes an “undivided share” in land.

It has effect for land transactions which take place on or after 29 October 2018.

SDLT – Consultation on charge for non-residents

The government will publish a consultation in January 2019 on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

SDLT – Changes to the filing and payment process 

As confirmed at Autumn Budget 2017, the time limit to file a Stamp Duty Land Tax (SDLT) return and pay the tax due will reduce from 30 days after the effective date of the transaction to 14 days.

The 14 day time limit will apply to transactions to purchase land in England and Northern Ireland, with an effective date on or after 1 March 2019.

To help make compliance with the new time limit easier, improvements will be made to the SDLT return.

The changes to the return will be in place for 1 March 2019.

Legislation will be introduced in Finance Bill 2018-19 and the changes to the return will be made by statutory instrument (SI).

Stamp Duty, SDRT and SDLT – Exemption for Financial Institutions in Resolution

Legislation will be introduced in Finance Bill 2018-19 to ensure that Stamp Duty, SDRT and SDLT are not chargeable on exercise of resolution powers under the UK special resolution regime for managing failed financial institutions.

The exemption is limited to certain transfers of securities issued by, and to securities and land held by a failed institution in resolution, to a temporary holding entity appointed by the Bank of England or to a temporary public body, and affected creditors.

For Stamp Duty, the measure has effect in relation to instruments which are executed on or after the date of Royal Assent of Finance Bill 2018-19.

For SDLT, the measure has effect for land transactions the effective date of which is on or after the date of Royal Assent of Finance Bill 2018-19.

SD, SDRT – Stamp Taxes on Shares Consideration Rules

The government has introduced a targeted market value rule for Stamp Duty and Stamp Duty Reserve Tax (SDRT) for listed securities transferred to connected companies.  The new rule comes into effect from Budget Day

The government has also announced consultation on the impact of aligning the Stamp Duty and SDRT consideration rules and introducing a general connected party market value rule.  The consultation will be published on 7 November.

Reforming consideration rules will simplify stamp taxes on shares and prevent contrived arrangements being used to avoid tax.

Stamp Duty and SDRT – Taxation of Regulatory Capital Securities Regulations and Taxation of Hybrid Capital Instruments

Some companies raise funds by issuing hybrid capital instruments (HCI) which sit close to the border between debt and equity. This means determining the correct tax treatment can be problematic, leading to uncertainty for companies. To align with regulatory change and ensure tax rules remain effective, the government has taken the opportunity to revoke the current Taxation of Regulatory Capital Securities Regulations (which applied to regulated sectors like banks and insurers) and have introduced Taxation of Hybrid Capital Instruments (which can be issued by any sector).

Under the existing rules, there is a blanket carve out from stamp duty on transfers of regulatory capital securities (Regulation 7); this continues under the new legislation, with a blanket exemption from all stamp duties on a transfer of hybrid capital instruments (Part 3 s420A CTA 2009).

The revocation of the old exemption and its replacement with the new exemption take effect for transfers of relevant instruments on or after 29 October 2018.

Stamp Duty and SDRT – Share Incentive Plans (SIPs) legislation

Legislation will be introduced in Finance Bill 2018/19, to make a minor correcting amendment to section 95 of the Finance Act 2001 concerning stamp duty and stamp duty reserve tax relief for share incentive plans (SIPs).

References to “approved share incentive plans” or “approved SIPs” in section 95 Finance Act 2001 are replaced with “Schedule 2 SIPs”.

This puts the legislation onto the basis already operated by HM Revenue and Customs (HMRC) and confirms that the existing and long standing stamp duty relief for share incentive plans (SIPs) continues to apply. The basis on which the relief is available is unchanged.

The amendment will have effect retrospectively from 6 April 2014, when similar changes were introduced to Income Tax (Earnings and Pensions) Act 2003.

ATED – Annual Chargeable Amounts for the 2019 to 2020 chargeable period

The Annual Tax on Enveloped Dwellings (ATED) charges will rise in line with inflation for the 2019/20 chargeable period, beginning 1 April 2019. The charges for 2019-20 are based on the September 2018 CPI, which was a 2.4% increase, and rounded down to the nearest £50. A Treasury Order confirming the charges will be published shortly after Budget.

The table below shows the new charges for the 2019/20 chargeable period:

18 July 2018

Tips for completion of the SDLT return (SDLT1)

Relief for first time buyers      

• Question 1: type of property – enter code 1 (residential property)
• Question 9: claiming relief: enter ‘Yes’ and select code 32 from the drop down menu.
• Question 14: tax due – if the correct details have been entered the online system it will calculate the amount of SDLT due.

Further details about how to complete a SDLT1 can be found here.

Higher rates for additional dwellings

• Question 1: type of property – enter code 4 (not 1) for all purchases for which the higher rates are due.
• Use code 4:
  • for all purchases by companies and other non-individuals, and
  • where the purchaser intents to sell their current main residence but has not yet done so.
• Question 14: tax due – if code 4 entered at question 1 the online system will calculate the amount of SDLT due.

Information regarding this tax can be found here.

Changes to the filing and payment window

From 1 March 2019 the time frame for submitting returns and paying any SDLT due is reducing from 30 days to 14 days from the effective date of the transaction.  Further information and details of changes to the SDLT 4 will be available at a later date.

Address for SDLT returns and correspondence

Please note the address for:

• Submitting paper SDLT1 returns is:

BT Stamp Duty Land Tax

HM Revenue and Customs

BX9 1LT

United Kingdom

• SDLT correspondence is:

BT Stamp Duty Land Tax

HM Revenue and Customs

BX9 1HD

United Kingdom

1 April 2018

Wales Land Transaction Tax

The Welsh Revenue Authority (WRA) is running events and webinars to help conveyancers in the run-up to the introduction of the Land Transaction Tax in Wales, which will replace SDLT there.

Find out more

Register with the WRA now

If you want to undertake a transaction for land or property in Wales from April 2018 you will need to be registered with the WRA.

Please register now at www.gov.wales/wra.

The LTT tax calculator and guidance is also available on the website. The WRA is encouraging businesses to sign-up now and at least 10 days in advance of the first transaction to ensure a smooth transition to the new system from 1 April. You can read the full article in ‘latest news’ on the WRA website.

22 November 2017

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. ​

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 ValueAnnual chargeable amounts for the 2017 to 2018 chargeable periodAnnual 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.

A 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 details

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 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.

SDLT on gov.uk