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Stamp taxes

ICAEW Tax Faculty provides analysis of the announcements relating to stamp taxes in the Budget 2018

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SDLT: first-time buyers relief

First-time buyers relief for stamp duty land tax (SDLT) was introduced from 22 November 2017. It applies to purchases of residential property for £500,000 or less, provided the purchaser is a first-time buyer and intends to occupy the property as their only or main residence. First-time buyers purchasing their first home for £300,000 or less pay no SDLT. Where the purchase price is over £300,000 but below £500,000, 5% is payable on the amount exceeding £300,000.

The relief for first time buyers will be extended to purchasers of qualifying shared ownership properties who choose to pay SDLT in stages (rather than paying it on the market value of the whole property when they purchase their first share).

The extension is backdated to 22 November 2017 so first-time buyers in this position will be able to amend their return to claim a refund.

SDLT: non-residents buying residential property

A consultation will be published in January 2019 to consult on a SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.

SDLT: additional dwellings

A 3% additional SDLT charge was introduced from 1 April 2016 for purchasers of a dwelling who already own one or more dwellings, even if the intention is to occupy the new dwelling as the main home. Those purchasers who buy a replacement home before they have sold their existing home have to pay the additional rate of SDLT but they can then reclaim the additional charge if they sell within three years.

The time-frame for the reclaim has been extended with effect from Budget day.

If the previous main residence was sold on 28 October 2018 or earlier, HMRC must have the repayment claim within three months of the sale of that previous main residence, or within 12 months of the filing date of the return relating to the new residence, whichever is later.

If the previous main residence as sold on 29 October 2018 or later, the claim must be made within 12 months of the sale of that previous main residence, or within 12 months of the filing date of the return relating to the new residence, whichever is later.

Stamp taxes: resolution of financial institutions

Under the Banking Act 2009, the Bank of England has various resolution stabilisation powers to manage a failing financial institution in an orderly way. These ensure that an institution’s operations can be maintained to protect financial stability, depositors and the taxpayer. A transfer of securities and/or property held by the failed institution to a temporary holding entity appointed by the Bank of England or to a temporary public body is within scope of the stamp taxes.

Provision will be included in FB 2018-19 to ensure that stamp duty, stamp duty reserve tax and stamp duty land tax are not payable when a financial institution fails and there is a temporary transfer of shares and/or land to a bridge entity as part of the process of dealing with the failed entity. The change will apply for transfers made on or after Royal Assent of FB 2018-19.

Stamp taxes: share incentive plans

An amendment will be made to s95, Finance Act 2001 to ensure consistency across all legislation for share incentive plans and confirms that the existing stamp duty relief continues to apply. The change will have effect from 6 April 2014.

Stamp taxes: shares consideration rules

A targeted market value rule for stamp duty and stamp duty reserve tax will be introduced for listed securities transferred to connected companies. The purpose is the simplify stamp taxes on shares and prevent contrived arrangements being used to avoid tax. The tax will be charged on the higher of the actual consideration and the market value of the securities with effect from Budget day.

There will be a consultation published on 7 November 2019 on aligning the stamp duty and the stamp duty reserve tax consideration rules and introducing a general connected party market value rule.