HMRC SDLT: SDLTM09655 – Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: withdrawal of relief
Principles and Concepts of SDLT Higher Rate Charge
This section of the HMRC internal manual explains the higher rate charge for Stamp Duty Land Tax (SDLT) applicable to certain non-natural persons acquiring residential property. It covers the withdrawal of relief under FA03/S55/SCH4A.
- SDLT is chargeable on property acquisitions by non-natural persons.
- Higher rate applies to residential properties.
- Relief withdrawal is detailed under specific legislative provisions.
- Guidance is intended for HMRC internal use.
Understanding the Higher Rate Charge for Stamp Duty Land Tax (SDLT)
What is Stamp Duty Land Tax (SDLT)?
Stamp Duty Land Tax (SDLT) is a tax paid when you buy a property or land in England and Northern Ireland. The amount you pay depends on the price of the property. There are various rates, and one specific situation involves a higher rate for certain buyers.
What is the Higher Rate Charge?
The higher rate of SDLT usually applies to residential properties bought by certain types of buyers, known as non-natural persons. This includes companies, partnerships, and similar organisations. The standard higher rate is 15% for these acquisitions. However, there may be exclusions to this higher charge.
Exclusions from the Higher Rate Charge
Under certain conditions, some buyers can qualify for exclusions from the 15% higher rate charge. These exclusions allow a buyer to potentially pay a lower rate or no charge at all. It is important to understand under what circumstances these exclusions apply.
The Control Period
An essential term to understand is the ‘control period.’ This is a three-year window starting from the date of the property transaction. If the conditions that justified the exclusion from the higher rate charge no longer apply during this period, the exclusion is withdrawn. This means that the higher rate charge may then be applicable.
Withdrawal of Relief
When the conditions for the exclusion are no longer met within the three-year control period, this is referred to in the legislation as the ‘withdrawal of relief.’ In simpler terms, if something changes and you no longer qualify for the exclusion, you will have to pay the higher SDLT rate.
Rules Regarding Withdrawal
There are specific rules for each of the exclusions from the higher threshold charge. It’s important to note:
– Withdrawal of relief can still happen even if the buyer meets the criteria for a different exclusion during the control period.
– If unforeseen circumstances occur that make it unreasonable for the buyer to continue with their original property plans, withdrawal of relief may not apply.
Examples of Unforeseen Circumstances
To illustrate this further, consider an example:
– Imagine a company buys a residential property, expecting to use it for a director and their family. If this director falls seriously ill and the property ends up being vacant for a significant time while waiting for their recovery, it’s possible that the buyer may not be penalised with the higher rate of SDLT.
In these decisions, HMRC looks at all the relevant facts to determine if the situation qualifies as unforeseen.
What Are ‘Reasonable Steps’?
The term ‘reasonable steps’ refers to the actions that a sensible business would typically take under similar circumstances to fulfil their property plans. These steps are not rigidly defined but should reflect standard business practices.
Key Takeaways
– The three-year control period is crucial for determining whether a buyer continues to qualify for the higher rate exclusion.
– The concept of withdrawal of relief means if the buyer’s circumstances change, they may need to reassess their SDLT obligations.
– Unforeseen changes that hinder property usage can impact SDLT rates, but HMRC will consider the broader context when making decisions.
Further Information and Guidance
For detailed information, refer to the official HMRC guidance or specific pages relevant to your situation. For instance, you can visit the page SDLTM0000 for more on this subject.
Understanding SDLT, especially concerning higher rates and exclusions, is important for any buyer, particularly non-natural persons who may find themselves subject to these additional rules. Keep track of your property’s usage, the buyers’ status, and any changes in circumstances that could affect your SDLT obligations.
Stay informed about the latest updates and seek advice if needed to ensure you adhere to the tax requirements effectively.
Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM09655 – Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: withdrawal of relief
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