Clarification of SDLT legislation

Since SDLT was introduced more than 2 years ago, the original legislation has been much extended, amended and refined.  Budget 2006 announces further simplifications coming into force at Royal Assent (for primary legislative changes) or 12 April 2006 (for Treasury regulations) including:

  • Gifts of property to donees bearing capital gains or IHT on the gift and payments of a landlord's reasonable costs for the grant, variation or termination of a lease are now exempt.
  • Partnerships carrying on non-property dealing or developing trades or professions will no longer incur SDLT on the transfer of partnership land interests.
  • The rules for rent variations will be simplified.  If a rent increase is not provided for in a lease there will only be an SDLT charge where it is an increase in the first five years.  Thereafter, a simplified version of the current abnormal increase rules will be applied to any increase.
  • The rules that apply where a new lease is backdated to the expiry of a previous lease will be simplified.

SDLT and alternative finance

Earlier Budgets introduced reliefs for individuals acquiring land and buildings under alternative financing arrangements where the payment of interest is not featured so that SDLT charges for such structures match those arising from traditional loans.  These reliefs are now extended to clubs, companies, trusts and other persons entering into them.

SDLT – increase in residential thresholds

For residential property transactions with an effective date after 23 March 2006, SDLT will be payable on chargeable consideration exceeding £125,000 (previously £120,000).

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