HMRC SDLT: SDLTM00540 – Scope: What is chargeable: Exempt transactions: Registered social landlords FA03/SCH3/PARA2

Exempt Transactions for Registered Social Landlords

This section of the HMRC internal manual provides guidance on exempt transactions under FA03/SCH3/PARA2 for registered social landlords. It outlines the principles and concepts related to stamp duty land tax exemptions.

• Defines the scope of chargeable transactions.
• Explains the criteria for exemptions applicable to registered social landlords.
• Details the legislative framework governing these exemptions.
• Clarifies the application process for exemptions.

Stamp Duty Land Tax (SDLT) Guidance for Registered Social Landlords

Understanding SDLT Exemptions

Stamp Duty Land Tax (SDLT) is a tax that may apply when you buy property or land in the UK. However, certain transactions can be exempt from this tax. This guide explains when registered social landlords are exempt from paying SDLT, particularly when granting leases to individuals.

What is a Registered Social Landlord?

A registered social landlord is an organisation that provides affordable housing. They are generally non-profit and operate under specific regulations. These landlords include housing associations and cooperatives that are registered and regulated by the relevant housing authority.

When is a Lease Exempt from SDLT?

A lease can be exempt from SDLT when the following conditions are met:

– The lease has either an indefinite term or can be ended by giving notice of one month or less.
– The lease is granted to one or more individuals (tenants).
– The arrangement involves a registered social landlord and a housing authority to provide housing for individuals nominated by that authority.

What is a Housing Authority?

Housing authorities play a key role in providing public housing in the UK. They are defined as follows:

– In England and Wales: A principal council as described by the Local Government Act 1972, or the Common Council of the City of London.

– In Scotland: A council formed under section 2 of the Local Government etc. (Scotland) Act 1994.

– In Northern Ireland: The Department for Social Development in Northern Ireland, or the Northern Ireland Housing Executive.

This means that if an individual is granted a lease through a registered social landlord and is nominated by the appropriate housing authority, the transaction may qualify for an SDLT exemption.

Examples of Exempt Transactions

Here are a few practical examples to help clarify when a lease might be exempt from SDLT:

– Example 1: A registered social landlord grants a lease for an indefinite period to a family nominated by the local council. Since the lease is for an indefinite term and involves a housing authority, this transaction is exempt from SDLT.

– Example 2: If a registered social landlord issues a lease to a single individual who can terminate it with one month’s notice, and this individual is nominated by the local council, the transaction remains exempt from SDLT.

– Example 3: Consider a situation where a registered social landlord offers a lease for six months but can be terminated by the tenant with a month’s notice. Since it meets the criteria of a lease with short notice capability, it is also exempt from SDLT.

Important Points to Remember

– Indefinite Lease: This means the lease does not have a set end date and continues until either party decides to terminate it.

– Short Notice: The lease can be terminated with one month’s notice or less, allowing flexibility in housing arrangements.

– Eligibility Criteria: The exemption only applies when the registered social landlord has entered into an arrangement with a housing authority.

Non-Qualifying Transactions

Certain transactions will not qualify for the SDLT exemption. Here are some examples:

– Example 1: If a lease is granted by a registered social landlord directly to a private individual who has not been nominated by a housing authority, this transaction would not be exempt from SDLT.

– Example 2: A lease for a fixed term of more than six months where the tenant does not have the option to terminate it with one month’s notice would also not qualify for exemption.

– Example 3: Transactions involving private landlords, or where there isn’t a registered social landlord or housing authority involved, do not qualify for SDLT exemption.

Conclusion

While this guidance outlines when registered social landlords can benefit from SDLT exemptions, it is essential to ensure that all conditions are met to qualify for the exemption. Always consult with a tax professional or legal expert for specific situations to ensure compliance with current regulations and tax obligations.

By understanding the relationships between registered social landlords, housing authorities, and the essential conditions for exemption, you can ensure that your transactions are appropriately handled.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM00540 – Scope: What is chargeable: Exempt transactions: Registered social landlords FA03/SCH3/PARA2

View all HMRC SDLT Guidance Pages Here