Any transaction, where a pension fund is the purchaser, is subject to Stamp Duty Land Tax in the same way as any other transaction. There are no special rules for pension funds. Stamp Duty Land Tax will only be due where there is chargeable consideration (paragraph1, Schedule 4, Finance Act 2003) for the transaction.
Where there is a transfer of assets and obligations from one pension fund to another, for example, on the payment of a statutory cash equivalent transfer value for an individual, or on a merger of funds, the transfer of land from the trustees of one pension fund to the trustees of another is the acquisition of a chargeable interest under FA03/S48. This means it is within the scope of Stamp Duty Land Tax.
The normal charge to tax under Stamp Duty Land Tax arises on the consideration given for the land transaction.
In our view the assumption by the transferee fund or by the trustees of the transferee fund, of obligations to provide benefits is not chargeable consideration.
If other consideration is given by the transferee fund, or trustees of the transferee fund, in the form of money or money's worth then that will be chargeable consideration.
There would also be chargeable consideration if the transfer of obligations were in consideration of a defined monetary sum to be satisfied by the release of obligations by the former trustees.
A pension fund may borrow money and may grant a mortgage or other charge over land as security.
For Stamp Duty Land Tax purposes, it is necessary to consider the borrowing and the mortgage separately in the context of a transfer described above.
If the transferee fund, or trustees of transferee fund:
then we will not treat FA03/SCH4/PARA8 as meaning that there is chargeable consideration given for the land transaction.
Mortgages and other legal charges are security interests and dealings with them, including their creation and release, are specifically exempt from Stamp Duty Land Tax.
A land transaction for no consideration is exempt from notification under FA03/S77, so notification is only required where chargeable consideration over £40,000 is given for the transaction.
Pension fund A purchases a dwelling house from individual A for £275,000. Stamp Duty Land Tax is due on that consideration at the appropriate rate.
An SDLT1 should be lodged showing the £275,000 as consideration.
Pension fund A transfers all its assets to Pension fund B, these assets include
UK land and property. There is a £500,000 mortgage secured on these
properties and the transfer is subject to this charge plus a sum of £2.3m.
The transfer of this land is a land transaction: the chargeable consideration
will be a just and reasonable apportionment of the £2.3m (that is, the
amount that relates to the UK land and property) plus the £500,000 debt.
The obligation to provide benefits to A's pension holders is not chargeable
consideration.
An SDLT1 should be lodged showing the total of the apportioned consideration
plus the £500,000 debt assumed.
Purchases by pension funds are subject to the provisions of section 108 Finance Act 2003. Where a fund purchases more than one property, the question of linkage should be addressed. If the transactions are part of a single scheme or arrangement or a part of a series of transactions between the same vendor and purchaser or, in either case, persons connected with them, then they will be regarded as linked. Tax is due on each transaction at the rate applicable to the total of the chargeable considerations passing for all those transactions involved.
Pension Fund A agrees with individual B to purchase three parcels of land for £150,000 each. These purchases are regarded as linked. Stamp Duty Land Tax is due on each parcel at the rate applicable to the total consideration passing, £450,000.
One SDLT1 covering the three properties, or three separate SDLT1's, each showing the transaction to be linked and the total consideration for all three shown, should be lodged.
