Andrew Evans reviews the changes to stamp duty land tax (SDLT) and stamp duty on shares as announced in the 2018 Budget
First-time buyer relief
First-time buyer relief (an exemption from SDLT) is extended to buyers of the first share in a qualifying shared ownership property with a market value of £500,000 or less, with the relief also applying to the rental payments.
In a surprising move, this relief will be backdated to 22 November 2017 so that buyers of qualifying shared ownership property acquired since 22 November 2017 can claim an SDLT refund by amending their SDLT return.
Claiming SDLT refunds
The higher rates of SDLT (3% supplement on all rates) were introduced for the purchase of second and subsequent homes on and after 1 April 2016. However, this higher rate can also apply to purchasers of dwellings that they intend to use as their main residence. The purchasers must pay the extra 3% SDLT surcharge if they have not sold their old home at the same time as buying the replacement home.
A refund of the extra 3% SDLT could be made on the later of three months after the sale of the old home and 12 months after the filing of the SDLT return for the new home. In reality, this meant that anyone not selling their old home within 12 months of the purchase of the new home only had three months within which to claim the SDLT refund.
The refund period will now be extended to 12 months after the sale of the old home so giving taxpayers (and their tax advisers) more time to make the SDLT refund claim.
One technical change is that the definition of a “major interest” in a dwelling will be amended to include an undivided share in land. This will put beyond doubt any question of what is included within a major interest in land.
Filing of SDLT returns
The filing deadline for SDLT returns and the payment of SDLT will be reduced from 30 days to 14 days after the effective date of the transaction for sales completed on and after from 1 March 2019.
Note that SDLT only applies to property transactions in England and Northern Ireland. Land and buildings transaction tax (LBTT) applies to properties located in Scotland, and land transaction tax (LTT) applies for property sales in Wales.
Stamp taxes on shares
A targeted tax avoidance rule will apply from 29 October 2018 for listed securities transferred to a connected company. The shares will be deemed to be transferred at the higher of any consideration paid (or deemed to be paid) or the market value of the shares. The new rule will apply to stamp duty and to stamp duty reserve tax.
Non-resident buyers of residential property
The government will publish a consultation in January 2019 on an SDLT surcharge of 1% for non-residents buying residential property in England and Northern Ireland.
Need a handy summary of all the major measures from Budget 2018? Visit our at a glance guide.
About Andrew Evans
Andrew is a partner at Geldards LLP based in Cardiff. Andrew advises on a wide range of taxes for owner-managers and SMEs. He has been a member of the Welsh Government’s Tax Advisory Group for the last 4 years and has seen the development of LTT from inception to the current position.