HMRC SDLT: SDLTM62030 – Processing: Further guidance for completing forms SDLT1, SDLT3 and SDLT4: Transactions that do not need to be notified

Principles and Concepts of SDLT Forms

This section provides further guidance for completing forms SDLT1, SDLT3, and SDLT4, specifically focusing on transactions that do not need to be notified. It is part of the HMRC internal manual.

• SDLT1, SDLT3, and SDLT4 are forms related to Stamp Duty Land Tax.
• Guidance is provided for transactions exempt from notification.
• Part of HMRC’s internal manual for processing SDLT forms.
• Ensures compliance with tax regulations.

SDLT62030 – Processing: Further Guidance for Completing Forms SDLT1, SDLT3 and SDLT4

Transactions That Do Not Need to Be Notified

When dealing with property transactions, you may find some situations do not require you to notify Her Majesty’s Revenue and Customs (HMRC) about Stamp Duty Land Tax (SDLT). Here’s a breakdown of these transactions:

1. Acquisition of Major Interest in Land

In most cases, if you get a major interest in land, you might need to pay SDLT. However, if your transaction meets any of the following criteria, it does not need to be reported:

– The total chargeable amount for the transaction—including any related transactions—is below £40,000.

– You receive a lease that was originally granted for a term of seven years or more, and:

– The rent is under £1,000; or,
– Any other chargeable amount is below £40,000.

– You assign or surrender this type of lease, provided the chargeable amount for the assignment or surrender is below £40,000.

– If you get a lease that was originally granted for a term of less than seven years, and:

– The chargeable amount from the grant, assignment or surrender does not exceed the zero rate threshold.

2. Transactions Exempt Under Schedule 3 of the Finance Act 2003

Certain transactions are exempt from SDLT notifications as per Schedule 3 of the Finance Act 2003:

– The transaction has no chargeable consideration.

– Some leases provided by registered social landlords.

– Transactions connected to the dissolution of a marriage or civil partnership can also be exempt.

– Certain transactions occurring following a person’s death may not require notification.

– Some changes to testamentary deposits are included as well.

3. Alternative Property Finance Exemptions

There are also alternative property finance transactions that do not need to be reported. If you are involved in further transactions that fall under sections 71A(4) or 72A(4) of the Finance Act 2003, they may be exempt if they also fall under sections 71A(7) or 72A(7).

Transfer of Partnership Interest

If you transfer a partnership interest, this may not need to be reported if it meets the following condition:

– The transfer falls under paragraphs 14 or 17 of Schedule 15 to the Finance Act 2003, where the consideration does not go over the zero rate threshold.

Land Transactions That Are Not Major Interests

For any land acquisition that does not represent a major interest, you won’t need to notify HMRC if:

– The consideration does not exceed the zero rate threshold.

Important Note Regarding Reliefs

It’s essential to remember that even if your transaction is exempt from SDLT charges, you must still claim any applicable reliefs on your Land Transaction Return by using form SDLT1. This is true even if your relief results in reducing the SDLT owed to nil.

Examples of Transactions

Here are a few examples to illustrate the points mentioned above:

– If you purchase a property for a total amount of £39,000, this transaction does not require notification because it is below the £40,000 threshold.

– If you are granted a seven-year lease with an annual rent of £800, you do not need to report this lease as the relevant rent is under £1,000, and the total chargeable consideration does not exceed £40,000.

– Should you be involved in a divorce and transfer property between spouses as part of the settlement, this is likely an exempt transaction under the Finance Act.

– In the event of inheriting property after someone’s death, you may not need to notify the HMRC if the transaction falls under exempt categories.

– If a partnership interest is transferred and the amount involved does not surpass the zero rate threshold, no notification to HMRC is needed.

Claiming Reliefs on SDLT1

When completing the SDLT1 form, pay close attention to the sections where you can claim reliefs.

– Fill in all necessary details about the transaction and ensure that you specify the grounds for relief clearly.

– Even when your transaction does not incur any SDLT, you should complete this section to document that relief was claimed, as this helps HMRC keep accurate records.

– The SDLT1 form should be submitted even if stated amounts may lead to no SDLT being due. This will safeguard your interests and solidify your standing regarding the transaction.

Conclusion

Knowing the situations where transactions do not need to be notified to HMRC regarding SDLT helps save time and money. Ensure to review your transactions properly and ascertain if they fit into any of the categories mentioned. It can help streamline your processes and prevent unnecessary complexities during property transactions. For further specific inquiries or unique situations, consult with a professional or refer to HMRC for guidance.

Useful article? You may find it helpful to read the original guidance here: HMRC SDLT: SDLTM62030 – Processing: Further guidance for completing forms SDLT1, SDLT3 and SDLT4: Transactions that do not need to be notified

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