Budget changes to notification requirements

Following on from the announcement of changes in the Stamp Duty Land Tax (SDLT) notification thresholds in Budget 2008, the various Land Registries and HM Revenue & Customs (HMRC) have agreed to produce this note which conveyancers and others involved in land transactions may find helpful in explaining how these changes will work in practice.

As you know, Budget 2008 announced changes in requirements for notification of land transactions to HMRC. These changes will have effect for transactions with an effective date on and after 12 March 2008.

The changes raise the threshold for notification of non-leasehold transactions involving major interests in land from a chargeable consideration of £1,000 to £40,000. The changes also affect transactions involving leases for a term of seven years or more, which will now only have to be notified where any chargeable consideration other than rent is equal to or more than £40,000 or where any rent is equal to or more than £1,000.

As a result of these changes it will no longer be necessary to complete either form SDLT 1 Land Transaction Return or form SDLT 60 Self certificate if the transaction is below the new notification threshold.

The new notification system is we hope, much simpler and easier to understand for customers.

Some people have asked whether there are any circumstances in which a certificate that no SDLT is due (form SDLT 60) is now required. We are happy to confirm that there are now no circumstances in which an SDLT 60 is required in order for documents to be registered. Indeed, the current Finance Bill legislates to remove all reference to this form. Subject to Parliamentary approval, these consequential amendments will become law when the Bill receives Royal assent later this summer.

It may also help to mention that the acquisition of a chargeable interest other than a major interest in land remains notifiable only where there is chargeable consideration for which SDLT is due at a rate of 1 per cent or more. The acquisition of an easement, for example, is an acquisition of a chargeable interest other than a major interest in land. So, if the chargeable consideration on it was at the rate of 1 per cent or higher, the transaction would be notifiable.

It will be noted that the new notification threshold differs in two major respects from the previous rules. First, the threshold for notification in relation to major interests in residential property has risen from £1,000 to £40,000. Second, there is now a threshold for mixed and non-residential property, where none previously existed.

HMRC and the land registries will be working together over the coming months to update published guidance and will be happy to advise on any queries you might have.