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HMRC's guide to Stamp Duty changes

Friday 24 November 2017

Housing was at the forefront of the Chancellor's Autumn Budget this week, as government reforms revealed a shake up to Stamp Duty.

Addressing calls from Propertymark to exempt first time buyers from paying stamp duty, Philip Hammond announced the Governments plans to offer relief on properties for those trying to get a foot on the housing ladder.

But whilst first time buyer exemption was the main focus, the Chancellor's little red book detailed other amends to stamp duty that agents need to be aware of. HMRC has provided NAEA Propertymark members with a guide to the changes.

Relief for first time buyers

The Government are offering relief for first time buyers of residential properties costing no more than £500,000. First time buyers will pay no Stamp Duty Land Tax (SDLT) on the first £300,000 of the purchase price, with the remainder being charged at five per cent. 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 the Finance Bill 2017 to 2018.

To claim relief, code 32 should be entered at box 1.9 of a 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.

Changes to the filing and payment process

Following the announcement at the Spring Budget in March, the SDLT filing and payment window reduction from 30 days to 14 days will now 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. Planned improvements to the SDLT return are underway, and aim to make compliance with the new time limit easier. The legislation will be introduced in the Finance Bill 2018 to 2019.

Minor amendments to higher rates of SDLT

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 provided 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 Annual Tax on Enveloped Dwellings (ATED) charges will rise 3 per cent from 1 April 2018, in line with the September 2017 Consumer Prices Index. A Treasury Order confirming the charges will be published shortly.

The new rates will be:

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SD/SDRT/SDLT: Resolution of financial institutions

Legislation will be introduced in the 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 the Finance Bill 2018 to 2019.

SDRT: 1.5 per cent charge on the issue of shares

The Government will continue to not apply the Stamp Duty and Stamp Duty Reserve Tax (SDRT) 1.5 per cent 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.

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