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Stamp Duty Land Tax: Further Provisions on Alternative Property Finance: Technical Note.

  1. This note provides further information about an amendment to stamp duty land tax (SDLT) legislation that will be introduced in the Finance Bill 2007.
  2. The amendment provides that where a financial institution has provided an ‘alternative property finance’ product within the scope of sections 71A, 72 or 72A of the Finance Act 2003 any subsequent dealings in the interest held by the institution, or in any interest derived from it, will be exempt from stamp duty land tax (‘SDLT’).
  3. The amendment will affect financial institutions which offer ‘alternative property finance’ products and those who deal in such products or in interests derived from them. The amendment will have effect for dealings taking place on or after Royal Assent of Finance Act 2007.

Current law and proposed amendment

  1. Sections 71A, 72 and 72A of the Finance Act 2003 set out the SDLT treatment of various forms of ‘alternative property finance’ which offer alternatives to a conventional mortgage. The effect of this amendment is that alternative property finance is treated for SDLT purposes in the same way as a conventional mortgage, so that SDLT is paid on the purchase price but not on subsequent dealings between the financial institution and the purchaser. This amendment does not change this treatment.
  2. It is possible for a financial institution to sell or otherwise deal in the interest it holds under an alternative property finance product, just as it could sell or otherwise deal in its interest under a conventional mortgage.
  3. Dealings in the interest held by a financial institution under a conventional mortgage, or in any interest derived from it, would be exempt from SDLT. This amendment extends this exemption to dealings in the interest held by a financial institution under an alternative property finance product, or in any interest derived from it
  4. Enquiries as to the application of these provisions to specific transactions should be made to Michael Lyttle, Stamp Taxes Policy, michael.lyttle@hmrc.gsi.gov.uk. Information about other changes to SDLT following Budget 2007 is available on the HM Revenue & Customs website