Stamp Duties

Stamp taxes: relief for exchange intermediaries

Legislation is to be introduced in the Finance Bill 2007 that will bring the reliefs into line with the Markets in Financial Instruments (MiFID). This will affect intermediaries on securities exchanges who qualify for relief from stamp duty and stamp duty reserve tax (SDRT) on the purchase of UK shares, or for repurchases and stock lending.

Stamp taxes - reconstruction relief

With effect from the date of Royal Assent a company that holds some of its own shares will be able to claim relief from stamp duty and stamp duty land tax in respect of certain reconstructions and acquisitions without the need to cancel those shares. In particular these changes will benefit companies acquiring either the whole or part of a business of another company or the entire share capital of another company where either company has purchased and holds some of its own shares. Thus companies that hold their own shares will no longer need to cancel them, or accept shares in the acquiring company in order to qualify for relief.

Stamp duty land tax (SDLT)

The treatment of exchanges of property is to be amended by providing that where an exchange of property takes place between 'connected persons', the two legs are not 'linked' with each other for determining the rate of SDLT.

SDLT - relief for shared ownership trusts

The tax benefits for SDLT that currently apply for shared ownership leases will be extended to shared ownership trusts. Thus if a property is purchased by instalments, SDLT will be payable on each instalment. Shared ownership trusts have developed out of an interest in trying to use 'commonhold' as a way of providing affordable housing. Commonhold is an alternative to leaseholds and has come into existence recently following the Commonhold and Leasehold Reform Act 2002.

SDLT - payment of tax and self-certificate

From the date of Royal Assent the payment of the amount of self-assessed SDLT in a land transaction will no longer be required to accompany the return, although the tax will still be due by the filing date for the return. The SDLT certificate will also in future include a declaration by the agent submitting the self-certificate on the purchaser's behalf. This change will affect purchasers of freehold or leasehold property, solicitor's and licensed conveyors.

Relief for new zero carbon homes

Qualification for this relief will require zero carbon emissions from all energy use in the home over a year. To achieve this, the fabric of the home will be required to reach a very high energy efficient standard and be able to provide onsite renewable heat and power. The relief is available from 1 October 2007 for the five years to 30 September 2012 and applies to new homes which are liable to SDLT on the first sale. SDLT relief will be available where the purchase price is up to £500,000. Where the price exceeds £500,000 the SDLT liability will be reduced by £15,000. In this circumstance the balance of SDLT will remain due.

Please contact us for further information relating to the qualifying criteria, the fabric of the building, heat and power generation and additional power for appliances.