Works Exemption

Works carried out be a purchaser are chargeable consideration for SDLT purposes unless certain conditions are met.  Without exemption, tax would be payable on the open market cost of works or services provided i.e. the cost to obtain those works from a third party.

The works exemption applies if three conditions are met:

(a) The works are carried out after the effective date of the transaction;

(b) The works are to be carried out on land acquired or to be acquired under the transaction or other land held by the purchaser; and

(c) It is not a condition of the transaction that the works are carried out by the vendor.

All three conditions must be satisfied for the works exemption to be available.

The works exemption is a valuable ‘relief’ and it is therefore important to be certain that the conditions are satisfied.  Particular problems can arise when early occupation of land is taken, where works are carried out by a purchaser on both their land and the vendor’s retained land or if there are multiple parties to a transaction where the contractual obligation to deliver the works is not clear as between the vendor and purchaser.

For more information please email jfeaster@edftax.co.uk or call 07526 003021 to speak to John.