Read the original guidance here:
HMRC SDLT: SDLTM29660 – Reliefs

Understanding SDLT Relief for Highways Transactions

When dealing with certain transactions related to highways, there are special rules that apply under the Highways Act 1980. Here we explain how these rules work, particularly how SDLT (Stamp Duty Land Tax) relief can be claimed in specific situations.

What is the Highways Act 1980?

The Highways Act 1980 is a piece of legislation that governs various aspects of highways in the UK. It defines the responsibilities of local authorities regarding the maintenance and development of highways. Certain transactions involving highways may be exempt from SDLT if they are related to trunk roads.

Key Points about SDLT Relief for Highways

• Trunk Roads: A trunk road is a major road that is maintained by a government authority. Such roads are crucial for the transport network.
• Minister’s Role: In the context of the Highways Act 1980, the Minister refers to the government official responsible for highway matters.
• Exempt Transactions: If a transaction involves the Minister and relates to a highway that is, or will become, a trunk road, it is exempt from SDLT. This means that SDLT will not be charged on this transaction.

Conditions for SDLT Relief

For the SDLT relief to apply, the following conditions must be met:

• The transaction must involve the Minister.
• The transaction must relate to a highway or proposed highway that is designated as a trunk road.
• SDLT would normally be payable on this transaction as a cost incurred under the Highways Act 1980.

If these conditions are satisfied, the transaction qualifies for relief from SDLT, offering financial benefits to the parties involved.

How to Claim SDLT Relief

To claim this relief, it is necessary to take specific steps when filing a land transaction return. Here’s a simple guide to the process:

• Complete the land transaction return as you usually would.
• Enter the relevant information about the transaction, including the parties involved.
• When prompted at question 9 of the return, you should enter code 28 to indicate that you are claiming other reliefs.

It’s important to ensure that all details are accurate to avoid any issues with your claim.

Examples of Relief in Practice

Let’s look at an example to illustrate how this relief works:

• Example 1: Imagine a council needs to purchase land to build a new trunk road. The Minister is involved in this transaction as the official representing the government. Since this transaction relates to a proposed highway that is going to be a trunk road, it is exempt from SDLT. The council should claim this relief by following the correct filing procedure.
• Example 2: A developer sells a parcel of land to the government for the construction of a trunk road. Here, the government and the developer are the parties to the transaction, and as the agreement involves a proposed highway status as a trunk road, the developer can file for SDLT relief. The developer must fill in the land transaction return, entering code 28 at question 9.

Notes on SDLT and Highways Transactions

It is important to remember that only transactions meeting the defined criteria are eligible for SDLT relief. Always check that:

• The transaction involves the Minister.
• The highway is a trunk road or is planned to be one.

Failure to meet these requirements may result in the obligation to pay SDLT, which can impact the financial aspects of the transaction.

Important Considerations

When managing transactions related to highways, keep these considerations in mind:

• Documentation: It’s vital to keep thorough records of the transaction, including any agreements made with the government, to support your claim for relief.
• Time Limits: Be aware of any time limitations for submitting your land transaction return to ensure that you can claim your SDLT relief without any issues.
• Consult Professionals: If unsure, it is wise to consult tax professionals or legal advisors familiar with the SDLT regulations and how they apply to highway transactions.

Final Thoughts

Understanding the SDLT relief available for highways transactions can have significant financial implications for all parties involved. By familiarising yourself with the process and requirements for claiming this relief, you can navigate traffic to efficient and successful land transactions related to trunk roads.