Stamp duty land tax

A recent PwC survey found that 43% of people consider the implications of stamp duty before buying a property. Despite the recent removal of the ‘slab system’, which cut stamp duty for those buying homes under £900,000, further changes could be on the cards.

There were a number of changes announced today, the most significant of which apply to non-residents investing in UK real estate. In light of the proposal to bring all income and gains of non-residents in relation to UK property within the charge to UK corporation tax, the other proposals relating to UK corporation tax will affect UK and non-UK companies alike in the future.

As a reminder, when Land and Building Transaction Tax ("LBTT") was introduced in Scotland from 1 April 2015, one of the key differences to SDLT was the requirement to file 3 yearly lease review returns and a review return when a lease is assigned or terminated.

Relief from Stamp Duty Land Tax (SDLT) or Land and Buildings Transaction Tax (LBTT) can often be claimed on transfers of UK real estate between group companies.

Rob Walker, Real Estate Tax Leader, comments on the abolishment of stamp duty for first-time buyers on properties up to £300,000.

The Scottish Budget on 14 December 2017 announced a Land and Buildings Transaction Tax (LBTT) first time buyer relief along similar (but less generous) lines to the Stamp Duty Land Tax (SDLT) first time buyer relief announced in Autumn Budget 2017.

The taxpayer was a public house owner and had acquired a dwelling to convert into a bed & breakfast to run as part of its existing business. It claimed relief from 15% SDLT under para 5B of Sch 4A (trades involving making a dwelling available to the public).

Stamp Duty Land Tax (“SDLT”) is charged on transactions involving interests in land in England and Northern Ireland. Within the Draft Finance Bill 2018-19, the Government has announced changes to the compliance requirements for SDLT returns. The legislation would reduce the deadline for filing a return (and settling any SDLT liability), from 30 days to 14 days following the effective date of the transaction. The new requirements would apply to transactions with an effective date on or after 1 March 2019.

We understand that HMRC have raised a number of enquiries into SDLT returns where the lower mixed use rates of SDLT have been paid on acquisitions, which HMRC consider are solely residential land. This appears to be an ongoing area of interest for many HMRC inspectors.

Although we aren’t expecting any immediate changes in next month’s Budget, Theresa May has announced her intention to consult on introducing an additional 1%-3% SDLT on overseas buyers of UK residential property.

On 11 February 2019 HMRC and the Treasury together issued a consultation document in respect of a 1% SDLT surcharge for non-UK resident purchasers of residential land interests in England and Northern Ireland.

The proposal was first announced by the Prime Minister at the Conservative party conference in September 2018, and reconfirmed in the October 2018 Budget.

The consultation period will run until 6 May 2019 at which point the UK Government will consider the responses and decide whether to go ahead with the 1% surcharge on foreign buyers. The 1% surcharge is, therefore, not current law and does not yet apply.

For transactions with an effective date on or after 1 March 2019, there will be a reduction in the deadline for purchasers to file an SDLT return, and settle any SDLT liability arising. The deadline will reduce from 30 days to 14 days from the effective date of the transaction.

A derelict bungalow which had been acquired by a company for redevelopment was found not to be a dwelling subject to an additional 3% SDLT surcharge on the basis that it was not suitable for use as a dwelling at the time it was acquired.

A number of house buyers had entered into SDLT mitigation schemes, in each case advised by the same advisers. HMRC claimed to have raised SDLT assessments on them, on the basis that the SDLT mitigation scheme was ineffective, slightly before the expiry of the four year time-limit for making discovery assessments.

SDLT Case: Mr David Hyman and Mrs Sally Hyman v HMRC [2019] UKFTT 0469 (TC)

SDLT and COVID 19 lease negotiations

SDLT holiday

Update on changes to SDLT filing requirements

SDLT assessments unenforceable due to delays in issuing and serving them