Section 10: Stamp Duty Land Tax: Thresholds for Residential Property
Summary
1.Section 10 amends the provisions in Finance Act 2003 in order to raise the starting threshold for stamp duty land tax (SDLT) on residential property from £125,000 to £175,000. The measure will be time-limited and will apply to transactions made between 22 April 2009 and 31 December 2009. After that date the SDLT threshold for residential property will revert to £125,000.
Details of the Section
2.Subsection (1) provides that, in relation to transactions with an effective date on or after 22 April 2009 and before 1 January 2010, Part 4 of FA 2003 has effect as if references in the tables of that Part to £125,000 were replaced by £175,000. This means that the starting threshold for SDLT for transactions with an effective date within this period is £175,000.
3.Subsection (2) revokes two sets of regulations that were introduced in September 2008.
4.Subsection (2)(a) revokes the Stamp Duty Land Tax (Variation of Part 4 of the Finance Act 2003) Regulations 2008 (S.I. 2008/2338). These Regulations varied the requirements for notification of land transactions so that any transactions which are exempt from SDLT as a result of Regulations made under paragraph 5 of Schedule 3 to Finance Act 2003, have to be notified to HMRC.
5.Subsection (2)(b) revokes the Stamp Duty Land Tax (Exemption of certain Acquisitions of Residential Property) Regulations 2008 (S.I. 2008/2339). These Regulations exempted from SDLT acquisitions of residential property of not more than £175,000 between 3 September 2008 and 2 September 2009 inclusive.
6.Subsection (3) provides that the revocations made by subsection (2) have effect in relation to transactions with an effective date on or after 22 April 2009.
Background Note
7.SDLT is a transaction tax, payable by the buyer, on the purchase of land and property. SDLT is charged at varying rates, depending on the consideration given for a land transaction. In September 2008 the Chancellor announced, using regulation–making powers, that residential property worth not more than £175,000 would be exempt from SDLT for acquisitions made between 3 September 2008 and 2 September 2009 inclusive. These regulations will now be revoked and this section will ensure that the increased threshold of £175,000 for residential property will continue to apply beyond 3 September 2009 and will now end on 31 December 2009.
8.The effective date for the purposes of SDLT is normally the date of completion, not the date of exchange of contracts. However, the effective date may be earlier than the date of completion if the contract is substantially performed, for example, if the purchaser takes possession or pays the purchase price in advance of completion. Most residential contracts will not be substantially performed in advance of completion.
