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PBR: End of the road for Stamp Duty avoidance schemes

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6th Dec 2006
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As expected, a number of Stamp Duty Land Tax saving schemes were blocked with effect from the PBR statement on 6 December.

Examples of the schemes that will now be restricted include situations where a lease gives the landlord the right to terminate the lease within a set period, but the landlord receives a payment for not exercising that right. Or a situation where a person agrees to sell a property to a company and on completion the company transfers the property to its parent by way of a dividend in specie.

The changes were made in regulations made under powers contained in s109 Finance Act 2003, which will be replaced by legislation in the 2007 Finance Bill. Detailed notes on the changes are available as part of the related supplementary documents file (2Mb ZIP archive) on the HMRC website.

There will be transitional measures for those who entered contractual commitments before 2pm on the day.

"This will be a disappointment to people who have substantial property investments," noted Chiltern senior tax consultant Paul Howard. "While the schemes lasted, they could save substantial sums of money. If you're paying 4% Stamp Duty on a £12 million property, that's a lot of money."

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