The Budget announces a series of changes to Stamp Duty Land Tax and Stamp Duty.
Stamp duty land tax
Stamp duty land tax returns will no longer be required in respect of the disposal of major interests, not involving leases, where the consideration is £40,000 or less, compared to the current figure of £1,000. Transactions involving leases will only need to be notified if the rent is more than £1,000 per annum or the other consideration exceeds £40,000.
Currently 1% duty is charged on a premium where annual rent exceeds £600 per annum. This is being changed for transactions as from 12 March 2008 as follows:
For commercial property (all non residential property) where the annual rent is £1,000 or more 1% will continue to be charged on the premium.
For residential property, the rule is abolished which basically means there will be no stamp duty land tax on a premium until it reaches the normal threshold of £125,000.
Agents will also be given the ability to certify that no SDLT is due on a transaction using form SDLT 60.
The stamp duty land tax anti-avoidance legislation charges introduced last July year to deal with avoidance by investment partnerships was drawn too widely. It caught every change regardless of whether any consideration changed hands. It is therefore being amended with retrospective effect back to 19 July 2007. The intention is that where there is merely a transfer of an interest in a property within the partnership there will be no charge to stamp duty land tax.
The stamp duty land tax group relief rules are being strengthened to counter a particular method of avoidance. It has been possible to avoid a group relief clawback within three years of a property transfer by ensuring that the vendor left the group before the purchaser. This will not be effective for transactions after 12 March 2008.
Last year the Government introduced a temporary exemption from stamp duty land tax on new zero carbon homes, which will apply until 30 September 2012. The exemption is being retrospectively extended to cover new flats, taking effect from 1 October 2007.
Stamp duty
The minimum amount of stamp duty on a stampable document is £5. This is likely to be the amount payable instruments attracting ad valorem tax where the consideration is £1,000 or less or it is a fixed stamp for transferring shares.
Duty is abolished on these documents executed on or after 13 March 2008. In future it will be possible to send the documents direct to company registrar.
Extension of the Stamp Duty loan capital exemption
In most cases loan capital is exempt from stamp duty under section 79(4) Finance Act 1986. However, this does not apply if the return on the loan capital is dependent on the profits of the business or the value of any property. This has meant that certain capital market arrangements involving the right to interest on limited recourse terms have fallen outside the exemption. However, from Royal Assent of the Finance Act 2008 the exemption will be extended to cover these instruments.
