Reliefs

The Finance Act 2003 contains a number of SDLT reliefs. In some cases detail is provided in accompanying schedules. An outline of the main reliefs is provided below, although it should be noted that in almost every case conditions must be satisfied in order to obtain the relevant relief. It is recommended in each matter involving a relief claim that detailed SDLT advice is obtained.

1. Disadvantaged areas relief

The acquisition of a residential property situated in a designated disadvantaged area is exempt from charge to SDLT if either (a) the consideration does not include rent and is £150,000 or less or (b) the consideration consists only of rent and the relevant rental value is £150,000 or less.

2. Sale and leaseback relief

The leaseback element of a sale and leaseback arrangement is exempt from charge to SDLT if certain qualifying conditions are met.

3. Relief for certain acquisitions of residential property

Exemption from SDLT is available (subject to conditions) in the following circumstances:

(a) Acquisition of a dwelling by a house-building company from an individual in exchange for the acquisition of a new dwelling by that individual;

(b) Acquisition of a dwelling by a property trader from an individual acquiring a new dwelling from a house building company;

(d) Acquisition of a dwelling by a property trader of ‘chain breaking’ property from an individual;

(e) Acquisition of a dwelling from an individual by his employer in case of relocation of employment; or

(f) Acquisition of a dwelling by a property trader in circumstances of relocation of employment.

4. Zero carbon homes

The first acquisition of an accredited zero-carbon dwelling is exempt from SDLT up to an acquisition price of £500,000.

5. Compulsory purchase relief

The compulsory purchase of land to facilitate development by another person.

6. Compliance with planning obligations

A land transaction entered into by a public authority in order to comply with a planning obligation or a modification of a planning obligation if certain conditions are satisfied.

7. Group relief

An exemption for any land transactions which take place between a vendor and purchaser that are members of the same 75% corporate group. Detailed conditions must be satisfied for the relief to apply. There are a number of circumstances in which relief can be subject to a clawback within 3 years of a transaction taking place.

8. Acquisition and reconstruction reliefs

Reconstruction relief allows land and buildings to be transferred between two companies, as part of a transfer of an undertaking in exchange for shares, where there is no change of ownership, without any charge to stamp duty land tax.

Acquisition relief applies where a property is transferred as part of the acquisition of an undertaking of another company in exchange for shares and no more than 10% cash. The rate of tax charged is reduced to 0.5%.

9. Demutualisation of insurance company

Exemption for a land transaction which takes place on the demutualisation of an insurance company.

10. Demutualisation of building society

Exemption for a land transaction effected by Buliding Societies Act 1986 section 97(6) or 97(7).

11. Incorporation of limited liability partnership

The transfer of a chargeable interest to a limited liability partnership (LLP) in connection with its incorporation.

12. Transfers involving public bodies

A land transaction entered into, or in connection with, a reorganisation effected by or under a statutory provision is exempt from charge if both the purchaser and vendor are public bodies.

13. Transfer in consequence of reorganisation of parliamentary constituencies

A land transfer by an existing local constituency association to a new association which is a successor to the existing association.

14. Charities relief

A land transaction entered into by a charity as purchaser is exempt from charge to SDLT so long as the charity intends to hold the subject matter of the transaction for qualifying charitable purposes. Relief can be withdrawn if a disqualifying event occurs within three years of the effective date of the transaction.

15. Acquisition by bodies established for national purposes

A land transaction where the purchaser is:

(a) The Historic Buildings and Monument Commission for England

(b) The National Endowment for Science, Technology and the Arts

(d) The Trustees of the Natural History Museum

16. Right to buy transactions

Relief is given by limiting the amount of consideration chargeable by not including any additional consideration which may become payable if a contingency occurs.

17. Shared ownership leases

Provisions apply to restrict the chargeable consideration on grant of a shared ownership lease, the subsequent transfer of the reversion and certain transactions taking place pursuant to the Housing Act 1985.

18. Certain acquisitions by registered social landlords

A land transaction under which the purchaser is a registered social landlord is exempt so long as the transaction is funded with the assistance of a public subsidy.

19. Alternative property finance

A restricted form of relief applies to two types of alternative finance schemes:

(a) Sale to financial institution and leaseback to individual; and

(b) Sale to financial institution and sale back.

For more information on a situation which may involve the claim of a relief please email jfeaster@edftax.co.uk or call 07526 003021 to speak to John.