Partner Article

Stamp Duty Land Tax

Changes to the notification rules for leases

With Watson Burton LLP Law Firm

The Finance Bill 2008 makes amendments to the notification rules contained in the Finance Act 2003 in respect of both residential and non-residential land transactions which were confirmed by the 2008 Budget. This article provides a brief summary of those amendments.

The amendments affect property transactions (residential or non residential) where the chargeable consideration is less than £40,000, linked property transactions where the total chargeable consideration is less than £40,000 and certain leases where the chargeable consideration is less than £40,000.

Chargeable consideration for land transaction return purposes includes anything given for the transaction that is money or money’s worth. Cash is by far the most common form of consideration. Consideration for leases can be rent or a premium.

There is a calculator on the HMRC website which calculates whether any tax is due. Please see http://www.hmrc.gov.uk/so/new-sdlt-calculators.htm.

As stated, the requirements to make a Stamp Duty Land Transaction return in respect of leases were amended in the Budget.

There are now different notification rules for those transactions where the effective date is after 12 March 2008.

Where the effective date is before 12 March 2008

If a lease is granted for a term of 7 years or more for chargeable consideration HMRC must be informed whether or not Stamp Duty Land Tax (“SDLT”) is payable.

This is also the case for leases which are granted for a term of less than 7 years where SDLT is payable on the transaction i.e. where the premium or net present value of the rent is chargeable at a rate of 1% or higher (even if the purchaser is entitled to relief from payment of SDLT).

Where the effective date is after 12 March 2008

The requirement to make a return is no longer required if the lease is for more than 7 years provided that the premium paid for it is less than £40,000 or the annual rent is less than £1000.

Self Certificates, also known as SDLT 60’s are no longer required for transactions with an effective date of transaction after 12 March 2008.

Please remember that it is the responsibility of the purchaser to ensure that a SDLT return is made within 30 days of the effective date of the transaction. If you are unsure as to whether your property transaction requires you to make an SDLT return you should check with your solicitor as this article is a broad overview only. Failure to make the correct return could result in penalties and interest.

If you have any queries relating to this article, or any other Property matter, please contact Laura McIntosh at Watson Burton LLP on 0191 244 4444 or email laura.mcintosh@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .