The old and confusing stamp duty regime is to be replaced by a new and confusing system called stamp duty land tax. What does it mean? Here, a specialist tax lawyer explains the basics and the solicitor who advised the NHF in its battle with the Treasury over stamp duty explains how the sector got its way
Neil Cohen
This is to be continued, although in a modified form that may sometimes result in the relief not being available even though the RSL in question is a charity. The RSL must intend to hold the land for qualifying charitable purposes 鈥 that is, for use in furtherance of its charitable purposes (or those of another charity) or as an investment from which the profits are applied to the RSL鈥檚 charitable purposes. It is not entirely clear yet what the words 鈥渋nvestment鈥 and 鈥減rofit鈥 mean in this context. Also, the transaction must not have been entered into for the purposes of avoiding SDLT. However, the charities relief will be withdrawn if, within three years of the transaction, the RSL ceases to be a charity or the land is used for purposes other than those set out above. Relief may also be lost if these events occur after the three-year period but pursuant to arrangements made during the three year period. If the relief is withdrawn then the charitable RSL will be liable to pay the SDLT what it would have paid had the charities exemption not been available. There will be a partial clawback if only part of the land in question is subject to the withdrawal of charities relief. Publicly subsidised acquisitions
The current stamp duty relief for publicly subsidised acquisitions is to be continued unchanged under the SDLT regime. This will be of interest to non-charitable RSLs who would otherwise be liable to stamp duty/SDLT. Properties in disadvantaged areas
As from 10 April 2003, all non-residential property transactions in disadvantaged areas will be exempt from stamp duty and SDLT no matter how much the consideration. For residential properties in disadvantaged areas the exemption applies if the consideration is not more than 拢150,000. In addition, from 1 December 2003, all non-residential property transactions, wherever the property is situated, will be exempt from stamp duty provided the consideration is not more than 拢150,000. However, note that if a single contract covers six or more residential properties, they will qualify as 鈥渘on-residential鈥 for the above purposes. For mixed-use properties, it will be necessary to apportion the price 鈥渙n a just and reasonable basis鈥. The Stamp Taxes Office has indicated that it would consider apportionment on the basis of the percentage area quoted in planning applications where appropriate, or alternatively of floor space relating to the respective uses. Housing the homeless
A back-dated exemption is to be introduced to exempt from stamp duty/SDLT certain leases granted by RSLs under agreements with local authorities to house temporarily the homeless. This will apply to properties leased to the RSL for a term of five years or less and which the RSL agrees with a local authority to provide, for local authority nominees, temporary rented accommodation. The above exemption will apply to instruments executed after the date of royal assent of the Finance Act 2003, which should happen some time in July/August 2003. However, there is also provision for repayment of stamp duty where the agreement was executed between 1 January 2000 and royal assent of the Finance Act 2003 (this back-dating also applies to effectively exempt from stamp duty agreements that have not already been stamped). The claim for stamp duty repayment must be made before 1 January 2004. RSLs and all other property owners will need to be familiar with the new SDLT regime so as to be aware of the potential tax cost and, if possible, mitigate such cost. Neil Cohen is a partner in the tax and VAT division of solicitor Trowers & Hamlins
David Golten
Source
Housing Today
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