HMRC SDLT: SDLTM29640 – Reliefs

Principles and Concepts of SDLTM29640 – Reliefs

This section of the HMRC internal manual provides guidance on SDLTM29640 – Reliefs. It outlines the principles and concepts related to tax reliefs, focusing on the following key aspects:

• Eligibility criteria for various tax reliefs.
• Procedures for claiming reliefs effectively.
• Documentation required to support relief claims.
• Common pitfalls and errors in relief applications.
• Updates and changes in relief regulations.

Understanding Reliefs for Friendly Societies

What are Friendly Societies?

Friendly societies are mutual associations that provide financial services to their members, such as insurance, savings plans, or healthcare assistance. They are rooted in community and cooperative principles.

When is a Land Transaction Exempt from Charge?

According to the Friendly Societies Acts 1974 and 1992, certain land transactions involving friendly societies are exempt from charges. This means that if a friendly society is involved in specific activities, the transaction won’t incur additional tax charges. Here are the main situations that qualify:

• Amalgamation: When two or more registered friendly societies join together under section 82 of the 1974 Act. For example, if Society A and Society B decide to merge to form Society C, any land transactions related to this merger will not incur charges.
• Transfer of Engagements: This refers to when a registered friendly society transfers its responsibilities, such as its assets or liabilities, to another society under the same section. So, if Friendly Society X transfers its responsibilities to Friendly Society Y, that transaction is also exempt.
• Amalgamation under Section 85 of the 1992 Act: Similar to the 1974 Act, but this applies to different friendly societies. For instance, if Society D and Society E combine their resources under this section, this transaction is exempt from charges.
• Transfer of Engagements under Section 86 of the 1992 Act: If a friendly society decides to transfer its engagements to another party under this section, that transaction will not incur tax. For example, if Friendly Society Z chooses to transfer its engagements to a newly established society, this remains charge-free.
• Direction from the Financial Services Authority: If the Financial Services Authority directs a friendly society to transfer its engagements, that transaction is also exempt. This situation could arise in cases of restructuring or regulation adjustments.

How to Claim Relief

To benefit from these exemptions, you must claim the relief in a land transaction return or correct an existing return. When filling out this return, follow these steps:

1. Complete the land transaction return as you normally would.
2. In question 9, enter code 28, which is designated for ‘Other reliefs.’ This indicates that you are claiming a relief under the friendly societies provisions.
3. Ensure you provide all relevant details that substantiate your claim to avoid any issues.

Examples of How Relief Works

• Example 1: If a large friendly society in your local area decides to merge with another society to offer more comprehensive services to its members, this amalgamation may involve a piece of land for new offices. Since the merger falls under section 82 of the 1974 Act, any transactions related to this land are exempt from tax charges.
• Example 2: Suppose a friendly society decides to transfer its financial obligations due to strategic changes. If it chooses Friendly Society B as the recipient, the transfer of engagements will not attract any stamp duty as it operates under section 86 of the 1992 Act.
• Example 3: If the Financial Services Authority intervenes and instructs a friendly society to transfer its engagements to maintain compliance with regulations, the land transaction associated with this directive would also qualify for the exemption.

Key Principles to Remember

– The exemptions specifically apply to land transactions involving friendly societies either amalgamating or transferring engagements.
– It’s essential to follow the correct procedure for claiming these reliefs to ensure that they are acknowledged and that no unnecessary charges are applied.
– The rules set out in the relevant sections of the Friendly Societies Acts are crucial for understanding under what circumstances relief can be claimed.

Who Can Benefit from This Relief?

Any registered friendly society undergoing an amalgamation or a transfer of engagements is eligible to benefit from these tax reliefs. This applies to societies focusing on member benefits or addressing their members’ needs.

Ultimately, these provisions are designed to foster cooperation among societies and encourage growth, enhancing the services available to their members.

Important Considerations

– Ensure all registrations and paperwork are completed correctly in compliance with the Friendly Societies Acts. Only registered friendly societies are eligible for these reliefs.
– Keep updated on any regulatory changes that may affect your eligibility or the processes involved in claiming these exemptions.
– Consult with legal or financial advisors if there is any doubt about how to proceed with claiming reliefs or the details involved in specific transactions.

Seeking Further Guidance

If you need additional assistance related to friendly society transactions or claiming reliefs, consider referring to trusted resources or authorities, including legal advisors or financial institutions experienced in friendly societies. It’s always wise to have professional support when navigating complex regulations or processes.

This guidance aims to provide you with a clear understanding of the reliefs available for friendly societies involved in land transactions and the steps needed to claim them effectively.

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