A number of new measures relating to Stamp Duty Land Tax (SDLT) were announced by the Chancellor for the Autumn 2018 Budget. The new Stamp Taxes measures include higher rates of SDLT for additional dwellings, changes to the filing and payment process and first-time buyers' relief and shared ownership.
SDLT - Higher Rates of SDLT for Additional Dwellings ('HRAD')
The time limit for claiming a repayment of SDLT will be extended for customers who pay HRAD on the purchase of a property which they intend to be used as a main residence, and who subsequently sell their previous main residence.
A claim must be made:
- within 12 months of the sale of the previous main residence, or
- within 12 months of the filing date of the SDLT return for the new residence, on which HRAD was paid, whichever comes later.
The changes apply for transactions which attract HRAD where the old main residence is sold on or after 29 October 2018.
The definition of 'major interest' is also amended for the purposes of HRAD to make clear that it includes an 'undivided share' in land.
It has effect for land transactions which take place on or after 29 October 2018.
SDLT - Changes to the filing and payment process
As confirmed at Autumn Budget 2017, the time limit to file a Stamp Duty Land Tax (SDLT) return and pay the tax due will reduce from 30 days after the effective date of the transaction to 14 days.
The 14 day time limit will apply to transactions to purchase land in England and Northern Ireland, with an effective date on or after 1 March 2019.
To help make compliance with the new time limit easier, improvements will be made to the SDLT return.
The changes to the return will be in place for 1 March 2019.
Legislation will be introduced in Finance Bill 2018-19 and the changes to the return will be made by statutory instrument (SI).
SDLT - First-Time Buyers' Relief and Shared Ownership
Relief for first-time buyers will be extended to purchases of qualifying shared ownership property where the purchaser chooses not to make a market value election but to pay SDLT in stages.
Where the market value of the shared ownership property is £500,000 or less, the SDLT rates for first time buyers will be applied to the first share purchased. Relief will also apply to the rental payments.
Purchasers who make a market election are already eligible for the relief.
The changes will take effect on 29 October 2018 and will apply retrospectively from 22 November 2017.
A refund of tax can be claimed if the effective date of the purchase was on or after the 22 November 2017, a return was filed and SDLT paid as if no relief was due and the purchase would now qualify for first time buyers’ relief. Refunds for SDLT paid on the rent can also be claimed by purchasers who have made a market election.
There are also plans to consult on charging an additional 1% in Stamp Tax to foreign buyers.
Further information can be found at the HMRC website.