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STAMP TAXES

Stamp Duty: Changes to Loan Capital Exemption

Finance Bill 2008 will provide exemption from stamp duty on transfers of loan capital which are subject to a capital market arrangement on limited recourse terms. This will have effect from the date of Royal Assent.

Reduction of Stamp Duty Administrative Burden

With effect from 13 March 2008, instruments transferring stocks and shares that were previously chargeable with £5 stamp duty will be exempt, and will not need to be presented to HMRC for stamping.

Alternative Finance

Finance Bill 2008 will include legislation to classify certain alternative finance investment bonds which are similar to debt securities (‘sukuk’) as loan capital for stamp duty purposes. This will take effect from the date of Royal Assent.

SDLT: Relief for New Zero-carbon Flats

From 1 October 2007 to 30 September 2012, new zero-carbon flats will qualify for relief from SDLT. The relief will remove all SDLT liabilities for new zero-carbon flats up to a purchase price of £500,000. Where the purchase price exceeds £500,000, the SDLT liability will be reduced by £15,000 and the balance of the SDLT liability will be due in the normal way. The relief will only apply to the first sale of new flats. It will not apply to second and subsequent sales, or to existing flats even where they are converted to meet the zero-carbon criteria.

Where a Government department carries out an assessment of whether a home meets the zero-carbon standard, it will be permitted to charge a reasonable fee for this service.

SDLT: Thresholds

From 12 March 2008, the threshold for when a person has to notify HMRC of a non-leasehold land transaction will be raised from £1,000 to £40,000. Transactions involving leases for 7 years or more will only have to be notified where any chargeable consideration other than rent is more than £40,000, or where the annual rent is more than £1,000.

The provisions of FA 2003 which are intended to prevent the manipulation of lease thresholds will also be amended. For non-residential properties where the annual rent on a lease is £1,000 or more and a premium is paid, the normal 0% threshold that would have effect at £150,000 is withdrawn, and SDLT is charged at 1%. For residential properties, the normal thresholds will apply to any premium paid regardless of what rent is paid, and the existing ‘£600 rule’ will no longer have effect. Agents will be allowed to sign certificates on form SDLT 60 that no SDLT is due.

SDLT: Partnerships

Finance Bill 2008 will include legislation, with retrospective effect from 19 July 2007, to amend the SDLT provisions concerning transfers of property between partners within investment partnerships. The changes are intended to ensure that there will be no charge to SDLT where there is a transfer of an interest in a property within an investment partnership.

SDLT: Group Relief

FA 2003, Sch 7, para 1, which allows companies to claim group relief on transfers of assets between group members, will be amended from 13 March 2008 to counter avoidance schemes which have been structured to avoid the ‘clawback’ provisions in the legislation. Where the vendor leaves the group and, within 3 years of the asset having been transferred, there is a subsequent change in the control of the purchaser, HMRC will be able to link these two events and treat the purchaser as having left the group first. Group relief will not be clawed back where only the vendor leaves the group.

SDLT: Financial Avoidance

Finance Bill 2008 will introduce legislation intended to counter avoidance schemes, designed to take advantage of relief under FA 2003, s 71A or 72, whereby financial institutions have colluded with vendors so that the ownership of a property has been placed in a subsidiary company of the financial institution. The legislation is intended to ensure that relief will not be available if there are arrangements in place for a person to acquire control of the financial institution involved in the transaction. It came into effect on 12 March 2008.

Disclosure of SDLT Avoidance Schemes

The SDLT avoidance scheme disclosure rules are to be extended by legislation later in 2008 to residential properties worth £1 million or more.