Update on Modernising Stamp Duty on land and buildings in the UK

As announced by the Chancellor in the Pre-Budget Report on Wednesday 27th November the Government has today launched the next phase of consultation on its proposals to modernise stamp duty with the publication of draft legislation covering some of the key central elements of the modernised regime.

Announcing this, the next stage of consultation, the Financial Secretary to the Treasury, Ruth Kelly, said,

"Following the publication of our consultative document in April, there has been a great deal of constructive discussion about our proposals to modernise the stamp duty charge on land and buildings in the UK. I would like to thank all those who have been involved in the various consultative committee meetings with officials for their very useful input. And I am grateful to those with whom I have met since April for their views and comments. I very much hope that those interested in the property sector will continue to participate in discussions on the draft legislation published today as well as on all the remaining key issues."

The draft legislation, the associated commentary, and a summary of the responses received on the original consultative document can be found on the Inland Revenue's website at: www.inlandrevenue.gov.uk/consult_new/index.htm

The commentary also includes information on the developing proposals for the administration of modernised stamp duty. We are proposing a streamlined system which offers choices to customers in line with current customer practice, making use of new technology and offering greater consistency of response time and customer service by the Inland Revenue.

Detailed Information on draft Legislation

The draft legislation released today sets out the key provisions of the main charge, which cover:

• transactions within the scope of the modernised stamp duty regime for UK land and buildings,
  
  
• transactions giving rise to a charge to modernised stamp duty,
  
  
• the time at which the charge arises,
  
  
• the person liable to pay the charge and meet notification obligations,
  
  
• the calculation of the charge,
  
  
• the amount on which the charge is calculated,
  
  
• the taxpayer's obligations and rights,
  
  
• the implications of failure to meet notification and payment obligations,
  
  
• the enquiry process, and
  
  
• Inland Revenue powers and rights.

This package does not represent the whole of the legislation required to implement the new regime, and further consideration is needed for a number of key areas. The Government is committed to ensuring that it fully understands the implications of any changes that it makes.

The main areas for which further legislation is still to be drafted are:

• the scope of the charge for Scotland and Northern Ireland,
  
  
• the calculation of the charge to lease duty,
  
  
• the charge on certain indirect transactions in UK land and buildings,
  
  
• reliefs from charge, including
  
  
  • a relief for intra-group transactions and transfers arising from company reconstructions,
    
    
  • a relief for transfers to charities and similar organisations,
    
    
  • a relief for onward (or "sub") sales of property in certain situations,
    
    
  • a relief for transactions in disadvantaged areas, and
    
    
  • a relief for certain exchanges of interests in land.
    
    
• the procedures for the Inland Revenue issuing a certificate evidencing that a complete return has been received, with payment of tax if appropriate,
  
  
• the procedures by which a person might self-certify transactions as exempt from notification when submitting documents to the land registries,
  
  
• anti-avoidance measures to ensure the charge applies to all transactions in relevant interests in land, no matter how they are documented or structured, and
  
  
• the treatment of changes of interests in partnerships and trusts that hold UK land and buildings.

As further draft legislation is produced we plan to make this available on this website. We will, of course, continue to discuss the draft legislation published in this latest document, and the additional provisions, with our consultative committees over the next few months.

About the Consultation Process

The draft legislation, the associated commentary, and a summary of the responses received on the original consultative document can be found on the Inland Revenue's website at: www.inlandrevenue.gov.uk/consult_new/index.htm

Hard copies can be obtained from:
Inland Revenue Visitors Information Centre
Ground Floor, South West Wing
Bush House
Strand, London
WC2B Telephone: 020 7667 4001

Written responses on the consultation should be sent by post to:
Luke Liddiard,
Inland Revenue,
Room 116, New Wing,
Somerset House,
London, WC2R 1LB.
Or by email to msd.stampscondoc@ir.gsi.gov.uk

The deadline for responses is the 24 February 2003, however, in view of the likely timing of the Finance Bill 2003, we would urge readers of the draft legislation to respond well before this date if at all possible.