Stamp duty in the United Kingdom
Encyclopedia
In the United Kingdom
, stamp duty
is a form of tax charged on instruments (that is, written documents), and requires a physical stamp
to be attached to or impressed upon the instrument in question. The more modern versions of the tax no longer require a physical stamp.
The scope of stamp duty has been reduced dramatically in recent years. Apart from transfers of share
s and securities
, the issue of bearer instrument
s and certain transactions involving partnership
s, stamp duty was largely abolished in the UK from 1 December 2003. "Stamp duty land tax" (SDLT), a new transfer tax
derived from stamp duty, was introduced for land transactions from 1 December 2003. "Stamp duty reserve tax" (SDRT) was introduced on agreements to transfer uncertificated
shares and other securities in 1986, and with the growth of paperless transactions SDRT rather than stamp duty now applies to most transfers of shares and securities.
under "An act for granting to Their Majesties several duties on Vellum, Parchment and Paper for 4 years, towards carrying on the war against France". Similar duties had been levied in the Netherlands
. Stamp duty was so successful that it continues to this day through a series of Stamp Act
s.
During the 18th and early 19th centuries, stamp duties were extended to cover newspaper
s, pamphlet
s, lottery tickets, apprentices' indenture
s, advertisements, playing card
s, dice
, hat
s, glove
s, patent medicine
s, perfume
s, insurance policies, gold
and silver
plate, hair powder
and armorial bearings
.
The attempted enforcement of the Stamp Act 1765
in the English colonies in America
led to the outcry of no taxation without representation
. The argument over stamp duty
was a contributing factor to the outbreak of the American War of Independence.
Until 1793 stamp duty was always imposed as a fixed amount regardless of the size of the transaction. In 1808 stamp duty on conveyances of sale
, including transfers of land and shares, became an ad valorem tax..
Historically, stamp taxes were administered by the Board of Stamps. This merged with the Board of Taxes in 1833/1834, and the Board of Inland Revenue
was created under the Inland Revenue Board Act 1849 by merger of the Board of Excise and Board of Stamps and Taxes. Stamp taxes were then administered by the Inland Revenue Stamp Taxes business stream (formerly the Stamp Office). Another merger occurred in 2004, with the Inland Revenue and HM Customs & Excise to form HM Revenue & Customs which now itself manages stamp duty.
The Stamp Duties Management Act 1891 and the Stamp Act 1891 still contain much of the operative law on stamp duties, although there have been significant amendments subsequently and a partial consolidation was made in Finance Act 1999
. The Stamp Act 1891 was the inspiration for many of the older Australian stamp duty Acts.
share trading system would come into operation. In the event, SDRT was adapted for the change to trading in uncertificated shares in CREST
, and is charged on agreements to transfer shares and other securities. SDRT is not a stamp tax, but a self-assessed transfer tax which is usually collected automatically by stock market participants (such as brokers) when a transaction takes place.
Stamp duty remains in force for shares and securities that are held in certificated form which can only be transferred by using a physical stock transfer form, and runs in parallel to SDRT on agreements to transfer shares. Since 1986, both stamp duty and SDRT have been charged at a rate of 0.5% of the consideration
for the transfer of shares (in the case of stamp duty, rounded up to the nearest £5). The same transaction may include an agreement to transfer shares which may trigger a liability to SDRT, and the agreement may later be completed by a transfer of the shares which is liable to stamp duty. Provided that the transfer is stamped within 6 years, the charge to SDRT is cancelled to avoid a double charge. Stamp duty on repurchases of shares with a value of less than £1000 was abolished from 13 March 2008.
A higher rate of SDRT at 1.5% is charged for the issue or transfer of shares to a person who operates a depositary receipt
scheme or a clearance service (other than CREST, which is exempted). The higher charge compensates for the fact that later transfers of depositary interests or through the clearance services will not attract SDRT. This type of SDRT is by nature paid almost exclusively by offshore (i.e. non-UK) investors, primarily US fund managers and amounts to approx. 25% of the total SDRT collected annually.
A unique feature of SDRT, compared to other purely domestic taxes in the United Kingdom, is that more than 40% of the annual intake is collected from outside the UK, thus creating an annual inflow of approx. £1.5 billion pounds from foreign investors to the UK government.
. It largely replaced stamp duty
with effect from 1 December 2003. SDLT is not a stamp duty, but a form of self-assessed transfer tax
charged on "land transactions".
For typical transactions in land, such as the buying and selling of a residential house, there is little change from stamp duty, except that a tax return is required to be made to the HM Revenue & Customs
(previously Inland Revenue) and documents no longer need to be given a physical stamp. Like any other self-assessed tax, but unlike stamp duty, HM Revenue & Customs is able to enquire into an SDLT return and raise assessments to recover unpaid SDLT.
Whether or not tax is payable, HM Revenue and Customs require a return to be received by them within four weeks of the transaction completing failing which they have power to levy a fine on the tax payer – the fine is not for failure to pay the tax but for failure to make the return. When a return is accepted by HMRC they provide a certificate without which it is impossible to register a change in the land ownership.
SDLT is not a progressive tax
, but rather works on a "slab" basis, so the above percentages apply to the whole of the purchase price. For example, a house priced at £250,000 would attract an SDLT of £2,500, but one of £250,001 would be liable to SDLT of £7,500. The result is that SDLT has a distorting effect
on the housing market, because a house is very difficult to sell at prices just above each threshold, for example, £255,000.
In years prior to 2005, there had been a high level of house price inflation
in the UK but no change in these thresholds, leading to a substantial increase in the revenue from SDLT through fiscal drag
. In 2000-01, the Inland Revenue
received £2.145bn from residential stamp duty. In 2002-03, it received £3.59bn http://www.inlandrevenue.gov.uk/stats/stamp_duty/03IR153.pdf, rising to £6.5bn in 2007-8http://news.bbc.co.uk/1/hi/uk_politics/7542393.stm
¹ In 2005, the threshold for paying SDLT was raised from £60,000 to £120,000. In 2006, the threshold was further raised to £125,000. In certain disadvantaged areas the threshold is raised to £150,000.
In 2007, at the Conservative Party Conference in Blackpool, George Osborne, the Shadow Chancellor, announced that a Conservative Government would abolish Stamp Duty for first-time buyers on properties up to £250,000.
On 2 September 2008, the UK Government announced that the threshold for paying SDLT would be raised from £125k to £175k for one year, as from 3 September 2008. In the 2009 Budget
, the Chancellor extended this "stamp duty holiday" until the end of 2009. In the 2010 budget, the Chancellor ended stamp duty on homes under £250,000 for first-time buyers, while introducing a new 5% rate for properties over £1,000,000.
the Government announced their 'ambition' that all new homes will be 'zero-carbon' by 2016 (i.e. built to zero-carbon building standards) http://www.hm-treasury.gov.uk/pre_budget_report/prebud_pbr06/prebud_pbr06_index.cfm. To encourage this, an exemption from stamp duty land tax is to be granted, lasting until 2012, for all new zero-carbon homes up to £500,000 in value http://www.hm-treasury.gov.uk/budget/budget_07/bud_bud07_speech.cfm.
is granted. Any premium
for the grant is charged to SDLT at the same rates as for the purchase price for a sale of land; SDLT is also charged on the rent
payable under the lease, at the rate of 1% of the (discounted) net present value
of rent passing under the whole term of the lease. Previously, stamp duty was charged at rate of up to 24% of the annual rent. The amount of SDLT due on the grant of a typical commercial lease generally amounts to a substantial increase from the amount of stamp duty that would have been due previously.
s, or changes in the partners' partnership interests where the partnership owns land).
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, stamp duty
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
is a form of tax charged on instruments (that is, written documents), and requires a physical stamp
Impressed duty stamp
An Impressed Duty Stamp is a form of revenue stamp created by impressing a stamp on to a document using a metal die to show that the required duty had been paid. The stamps have been used to collect a wide variety of taxes and duties, including stamp duty and duties on alcohol, financial...
to be attached to or impressed upon the instrument in question. The more modern versions of the tax no longer require a physical stamp.
The scope of stamp duty has been reduced dramatically in recent years. Apart from transfers of share
Share (finance)
A joint stock company divides its capital into units of equal denomination. Each unit is called a share. These units are offered for sale to raise capital. This is termed as issuing shares. A person who buys share/shares of the company is called a shareholder, and by acquiring share or shares in...
s and securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
, the issue of bearer instrument
Bearer instrument
A bearer instrument is a document that indicates that the owner of the document has title to property, such as shares or bonds. Bearer instruments differ from normal registered instruments, in that no records are kept of who owns the underlying property, or of the transactions involving transfer of...
s and certain transactions involving partnership
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
s, stamp duty was largely abolished in the UK from 1 December 2003. "Stamp duty land tax" (SDLT), a new transfer tax
Transfer tax
A transfer tax is a tax on the passing of title to property from one person to another.In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of...
derived from stamp duty, was introduced for land transactions from 1 December 2003. "Stamp duty reserve tax" (SDRT) was introduced on agreements to transfer uncertificated
Stock certificate
In corporate law, a stock certificate is a legal document that certifies ownership of a specific number of stock shares in a corporation...
shares and other securities in 1986, and with the growth of paperless transactions SDRT rather than stamp duty now applies to most transfers of shares and securities.
History of UK stamp duties
Stamp duty was first introduced in England in 1694, during the reign of William and MaryWilliam and Mary
The phrase William and Mary usually refers to the coregency over the Kingdoms of England, Scotland and Ireland, of King William III & II and Queen Mary II...
under "An act for granting to Their Majesties several duties on Vellum, Parchment and Paper for 4 years, towards carrying on the war against France". Similar duties had been levied in the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
. Stamp duty was so successful that it continues to this day through a series of Stamp Act
Stamp Act
A stamp act is any legislation that requires a tax to be paid on the transfer of certain documents. Those that pay the tax receive an official stamp on their documents, making them legal documents. The taxes raised under a stamp act are called stamp duty. This system of taxation was first devised...
s.
During the 18th and early 19th centuries, stamp duties were extended to cover newspaper
Newspaper
A newspaper is a scheduled publication containing news of current events, informative articles, diverse features and advertising. It usually is printed on relatively inexpensive, low-grade paper such as newsprint. By 2007, there were 6580 daily newspapers in the world selling 395 million copies a...
s, pamphlet
Pamphlet
A pamphlet is an unbound booklet . It may consist of a single sheet of paper that is printed on both sides and folded in half, in thirds, or in fourths , or it may consist of a few pages that are folded in half and saddle stapled at the crease to make a simple book...
s, lottery tickets, apprentices' indenture
Indenture
An indenture is a legal contract reflecting a debt or purchase obligation, specifically referring to two types of practices: in historical usage, an indentured servant status, and in modern usage, an instrument used for commercial debt or real estate transaction.-Historical usage:An indenture is a...
s, advertisements, playing card
Playing card
A playing card is a piece of specially prepared heavy paper, thin cardboard, plastic-coated paper, cotton-paper blend, or thin plastic, marked with distinguishing motifs and used as one of a set for playing card games...
s, dice
Dice
A die is a small throwable object with multiple resting positions, used for generating random numbers...
, hat
Hat
A hat is a head covering. It can be worn for protection against the elements, for ceremonial or religious reasons, for safety, or as a fashion accessory. In the past, hats were an indicator of social status...
s, glove
Glove
A glove is a garment covering the hand. Gloves have separate sheaths or openings for each finger and the thumb; if there is an opening but no covering sheath for each finger they are called "fingerless gloves". Fingerless gloves with one large opening rather than individual openings for each...
s, patent medicine
Patent medicine
Patent medicine refers to medical compounds of questionable effectiveness sold under a variety of names and labels. The term "patent medicine" is somewhat of a misnomer because, in most cases, although many of the products were trademarked, they were never patented...
s, perfume
Perfume
Perfume is a mixture of fragrant essential oils and/or aroma compounds, fixatives, and solvents used to give the human body, animals, objects, and living spaces "a pleasant scent"...
s, insurance policies, gold
Gold
Gold is a chemical element with the symbol Au and an atomic number of 79. Gold is a dense, soft, shiny, malleable and ductile metal. Pure gold has a bright yellow color and luster traditionally considered attractive, which it maintains without oxidizing in air or water. Chemically, gold is a...
and silver
Silver
Silver is a metallic chemical element with the chemical symbol Ag and atomic number 47. A soft, white, lustrous transition metal, it has the highest electrical conductivity of any element and the highest thermal conductivity of any metal...
plate, hair powder
Duty on Hair Powder Act 1795
Duty on Hair Powder Act 1795 was an Act of the Parliament of Great Britain levying a tax on hair powder. It was repealed in 1869....
and armorial bearings
Heraldry
Heraldry is the profession, study, or art of creating, granting, and blazoning arms and ruling on questions of rank or protocol, as exercised by an officer of arms. Heraldry comes from Anglo-Norman herald, from the Germanic compound harja-waldaz, "army commander"...
.
The attempted enforcement of the Stamp Act 1765
Stamp Act 1765
The Stamp Act 1765 was a direct tax imposed by the British Parliament specifically on the colonies of British America. The act required that many printed materials in the colonies be produced on stamped paper produced in London, carrying an embossed revenue stamp...
in the English colonies in America
Colonial America
The colonial history of the United States covers the history from the start of European settlement and especially the history of the thirteen colonies of Britain until they declared independence in 1776. In the late 16th century, England, France, Spain and the Netherlands launched major...
led to the outcry of no taxation without representation
No taxation without representation
"No taxation without representation" is a slogan originating during the 1750s and 1760s that summarized a primary grievance of the British colonists in the Thirteen Colonies, which was one of the major causes of the American Revolution...
. The argument over stamp duty
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
was a contributing factor to the outbreak of the American War of Independence.
Until 1793 stamp duty was always imposed as a fixed amount regardless of the size of the transaction. In 1808 stamp duty on conveyances of sale
Conveyancing
In law, conveyancing is the transfer of legal title of property from one person to another, or the granting of an encumbrance such as a mortgage or a lien....
, including transfers of land and shares, became an ad valorem tax..
Historically, stamp taxes were administered by the Board of Stamps. This merged with the Board of Taxes in 1833/1834, and the Board of Inland Revenue
Inland Revenue
The Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax and stamp duty...
was created under the Inland Revenue Board Act 1849 by merger of the Board of Excise and Board of Stamps and Taxes. Stamp taxes were then administered by the Inland Revenue Stamp Taxes business stream (formerly the Stamp Office). Another merger occurred in 2004, with the Inland Revenue and HM Customs & Excise to form HM Revenue & Customs which now itself manages stamp duty.
The Stamp Duties Management Act 1891 and the Stamp Act 1891 still contain much of the operative law on stamp duties, although there have been significant amendments subsequently and a partial consolidation was made in Finance Act 1999
Finance Act 1999
The Finance Act 1999 is an Act of the United Kingdom Parliament prescribing changes to Excise Duties; Value Added Tax; Income Tax; Corporation Tax; and Capital Gains Tax...
. The Stamp Act 1891 was the inspiration for many of the older Australian stamp duty Acts.
Stamp duty reserve tax
Aside from an exemption for 'qualifying intermediaries' such as market makers at large banks, Stamp Duty Reserve Tax (SDRT) was introduced under the Finance Act 1986 to ensure that a form of tax equivalent to stamp duty would continue to be payable on the transfer of uncertificated shares. At that time, it was expected that the TAURUSTAURUS (share trading)
Taurus was a program that set out to transfer the London Stock Exchange from paper communication to an automated system...
share trading system would come into operation. In the event, SDRT was adapted for the change to trading in uncertificated shares in CREST
CREST
CREST is the Central Securities Depository for the U.K., Republic of Ireland, Isle of Man and Jersey equities and UK gilts, named after its securities settlement system, CREST. The project was launched in 1993, following the Taurus fiasco, and the company was founded in 1996. CREST allows...
, and is charged on agreements to transfer shares and other securities. SDRT is not a stamp tax, but a self-assessed transfer tax which is usually collected automatically by stock market participants (such as brokers) when a transaction takes place.
Stamp duty remains in force for shares and securities that are held in certificated form which can only be transferred by using a physical stock transfer form, and runs in parallel to SDRT on agreements to transfer shares. Since 1986, both stamp duty and SDRT have been charged at a rate of 0.5% of the consideration
Consideration
Consideration is the central concept in the common law of contracts and is required, in most cases, for a contract to be enforceable. Consideration is the price one pays for another's promise. It can take a number of forms: money, property, a promise, the doing of an act, or even refraining from...
for the transfer of shares (in the case of stamp duty, rounded up to the nearest £5). The same transaction may include an agreement to transfer shares which may trigger a liability to SDRT, and the agreement may later be completed by a transfer of the shares which is liable to stamp duty. Provided that the transfer is stamped within 6 years, the charge to SDRT is cancelled to avoid a double charge. Stamp duty on repurchases of shares with a value of less than £1000 was abolished from 13 March 2008.
A higher rate of SDRT at 1.5% is charged for the issue or transfer of shares to a person who operates a depositary receipt
Depositary receipt
A depositary receipt is a negotiable financial instrument issued by a bank to represent a foreign company's publicly traded securities. The depositary receipt trades on a local stock exchange....
scheme or a clearance service (other than CREST, which is exempted). The higher charge compensates for the fact that later transfers of depositary interests or through the clearance services will not attract SDRT. This type of SDRT is by nature paid almost exclusively by offshore (i.e. non-UK) investors, primarily US fund managers and amounts to approx. 25% of the total SDRT collected annually.
A unique feature of SDRT, compared to other purely domestic taxes in the United Kingdom, is that more than 40% of the annual intake is collected from outside the UK, thus creating an annual inflow of approx. £1.5 billion pounds from foreign investors to the UK government.
Revenues from stamp duties
Revenue from stamp duties is pro-cyclical with economic activity. In terms of GDP and total tax revenue the highest values have been reached during the dot.com boom years at the end 20th century, notably in 2000-01. For 2008-09 the value is back to the level of the mid 1990ies which is around 0.2% of GDP.| Year | Stamp duty reserve tax | Standard Stamp Duty | Standard Duties Total Revenue | over Total Tax Revenue | over GDP |
|---|---|---|---|---|---|
| 1995-96 | n.a. | n.a. | 1,810 | 0,59 | 0,20 |
| 1996-97 | n.a. | n.a. | 1,966 | 0,60 | 0,20 |
| 1997-98 | n.a. | n.a. | 3,033 | 0,73 | 0,25 |
| 1998-99 | n.a. | n.a. | 3,696 | 0,79 | 0,28 |
| 1999-00 | n.a. | n.a. | 5,617 | 1,10 | 0,40 |
| 2000-01 | n.a. | n.a. | 7,383 | 1,26 | 0,46 |
| 2001-02 | 4,218 | 367 | 4,586 | 0,77 | 0,28 |
| 2002-03 | 3,669 | 455 | 4,124 | 0,69 | 0,24 |
| 2003-04 | 3,280 | 418 | 3,698 | 0,65 | 0,22 |
| 2004-05 | 3,454 | 548 | 4,001 | 0,64 | 0,23 |
| 2005-06 | 4,105 | 961 | 5,067 | 0,77 | 0,28 |
| 2006-07 | 4,767 | 745 | 5,511 | 0,77 | 0,28 |
| 2007-08 | 5,372 | 716 | 6,091 | 0,82 | 0,30 |
| 2008-09 | 3,673 | 349 | 4,022 | n.a. | 0,22 |
| in million Euro | in % | in % |
Stamp duty land tax
The "stamp duty land tax" (SDLT) was a new tax in land transactions that was introduced by the Finance Act 2003Finance Act 2003
The Finance Act 2003 is an Act of the Parliament of the United Kingdom prescribing changes to Excise Duties, Value Added Tax, Income Tax, Corporation Tax, and Capital Gains Tax...
. It largely replaced stamp duty
Stamp duty
Stamp duty is a tax that is levied on documents. Historically, this included the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions. A physical stamp had to be attached to or impressed upon the document to denote that stamp duty...
with effect from 1 December 2003. SDLT is not a stamp duty, but a form of self-assessed transfer tax
Transfer tax
A transfer tax is a tax on the passing of title to property from one person to another.In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of...
charged on "land transactions".
For typical transactions in land, such as the buying and selling of a residential house, there is little change from stamp duty, except that a tax return is required to be made to the HM Revenue & Customs
Her Majesty's Revenue and Customs
Her Majesty's Revenue and Customs is a non-ministerial department of the UK Government responsible for the collection of taxes and the payment of some forms of state support....
(previously Inland Revenue) and documents no longer need to be given a physical stamp. Like any other self-assessed tax, but unlike stamp duty, HM Revenue & Customs is able to enquire into an SDLT return and raise assessments to recover unpaid SDLT.
Whether or not tax is payable, HM Revenue and Customs require a return to be received by them within four weeks of the transaction completing failing which they have power to levy a fine on the tax payer – the fine is not for failure to pay the tax but for failure to make the return. When a return is accepted by HMRC they provide a certificate without which it is impossible to register a change in the land ownership.
Residential land purchases
For residential house purchases, the current rates in the UK are as follows:| Consideration | Rate |
|---|---|
| up to £125,000 | 0% |
| from £125,001 to £250,000 | 1% |
| from £250,001 to £500,000 | 3% |
| from £500,001 to £1,000,000 | 4% |
| over £1,000,000 | 5% (from April 2011) |
SDLT is not a progressive tax
Progressive tax
A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...
, but rather works on a "slab" basis, so the above percentages apply to the whole of the purchase price. For example, a house priced at £250,000 would attract an SDLT of £2,500, but one of £250,001 would be liable to SDLT of £7,500. The result is that SDLT has a distorting effect
Market distortion
In neoclassical economics, a market distortion is any event in which a market reaches a market clearing price for an item that is substantially different from the price that a market would achieve while operating under conditions of perfect competition and state enforcement of legal contracts and...
on the housing market, because a house is very difficult to sell at prices just above each threshold, for example, £255,000.
In years prior to 2005, there had been a high level of house price inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
in the UK but no change in these thresholds, leading to a substantial increase in the revenue from SDLT through fiscal drag
Fiscal drag
Fiscal drag happens when the government's net fiscal position fails to cover the net savings desires of the private economy, also called the private economy's spending gap...
. In 2000-01, the Inland Revenue
Inland Revenue
The Inland Revenue was, until April 2005, a department of the British Government responsible for the collection of direct taxation, including income tax, national insurance contributions, capital gains tax, inheritance tax, corporation tax, petroleum revenue tax and stamp duty...
received £2.145bn from residential stamp duty. In 2002-03, it received £3.59bn http://www.inlandrevenue.gov.uk/stats/stamp_duty/03IR153.pdf, rising to £6.5bn in 2007-8http://news.bbc.co.uk/1/hi/uk_politics/7542393.stm
¹ In 2005, the threshold for paying SDLT was raised from £60,000 to £120,000. In 2006, the threshold was further raised to £125,000. In certain disadvantaged areas the threshold is raised to £150,000.
In 2007, at the Conservative Party Conference in Blackpool, George Osborne, the Shadow Chancellor, announced that a Conservative Government would abolish Stamp Duty for first-time buyers on properties up to £250,000.
On 2 September 2008, the UK Government announced that the threshold for paying SDLT would be raised from £125k to £175k for one year, as from 3 September 2008. In the 2009 Budget
United Kingdom budget
The United Kingdom budget deals with HM Treasury budgeting the revenues gathered by Her Majesty's Revenue and Customs and expenditures of public sector departments, in compliance with government policy.Adjustment is achieved with the GDP deflator....
, the Chancellor extended this "stamp duty holiday" until the end of 2009. In the 2010 budget, the Chancellor ended stamp duty on homes under £250,000 for first-time buyers, while introducing a new 5% rate for properties over £1,000,000.
Zero-carbon exemption
In the December 2006 Pre-Budget ReportPre-Budget Report
In the United Kingdom, the Autumn Statement, at times the Summer Statement and the Pre-Budget Report , is one of the two statements HM Treasury makes each year to Parliament upon publication of economic forecasts, the other being the annual Budget...
the Government announced their 'ambition' that all new homes will be 'zero-carbon' by 2016 (i.e. built to zero-carbon building standards) http://www.hm-treasury.gov.uk/pre_budget_report/prebud_pbr06/prebud_pbr06_index.cfm. To encourage this, an exemption from stamp duty land tax is to be granted, lasting until 2012, for all new zero-carbon homes up to £500,000 in value http://www.hm-treasury.gov.uk/budget/budget_07/bud_bud07_speech.cfm.
Leases
In addition to SDLT on the purchase price for land, SDLT is also charged when a leaseLease
A lease is a contractual arrangement calling for the lessee to pay the lessor for use of an asset. A rental agreement is a lease in which the asset is tangible property...
is granted. Any premium
Premium
Premium may refer to:* Premium , a promotional item that can be received for a small fee when redeeming proofs of purchase that come with or on retail products....
for the grant is charged to SDLT at the same rates as for the purchase price for a sale of land; SDLT is also charged on the rent
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
payable under the lease, at the rate of 1% of the (discounted) net present value
Net present value
In finance, the net present value or net present worth of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values of the individual cash flows of the same entity...
of rent passing under the whole term of the lease. Previously, stamp duty was charged at rate of up to 24% of the annual rent. The amount of SDLT due on the grant of a typical commercial lease generally amounts to a substantial increase from the amount of stamp duty that would have been due previously.
Transfer of land
SDLT is also charged on certain transactions involving the transfer of land involving partnerships (transfers of land from or to the partnerPartnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
s, or changes in the partners' partnership interests where the partnership owns land).
Stamp Duty Mitigation
Some tax advisers specialise in SDLT mitigation, a specialist tax planning procedure aimed at reducing SDLT on large purchases. http://www.stampdutyrates.org.ukSee also
- Finance ActFinance ActIn the UK, the Chancellor of the Exchequer delivers an annual Budget speech on Budget Day, outlining changes in spending, as well as tax and duty. The changes to tax and duty are passed as law, and each year form the respective Finance Act...
of the UK (1986) - Financial transaction taxFinancial transaction taxA financial transaction tax is a tax placed on a specific type of financial transaction for a specific purpose.This term has been most commonly associated with the financial sector, as opposed to consumption taxes paid by consumers. However, it is not a taxing of the financial institutions themselves...
- Property taxProperty taxA property tax is an ad valorem levy on the value of property that the owner is required to pay. The tax is levied by the governing authority of the jurisdiction in which the property is located; it may be paid to a national government, a federated state or a municipality...
- Residential property market in the United Kingdom
- Transfer taxTransfer taxA transfer tax is a tax on the passing of title to property from one person to another.In a narrow legal sense, a transfer tax is essentially a transaction fee imposed on the transfer of title to property. This kind of tax is typically imposed where there is a legal requirement for registration of...