Unit trust seeding relief has been withdrawn for land transactions with an effective date of on or after 22 March 2006. The relief, given by section 64A Finance Act 2003, provided relief from stamp duty land tax ("SDLT") on the contribution of property into a newly formed unit trust in consideration of an issue of units. Furthermore, provisions deeming that a transfer of property to a company "connected" with the transferor is transferred at not less than the market value of the property for the purposes of calculating SDLT, are now extended to apply to transfers to trustees of a unit trust.
Unit trust seeding relief will still be available for transfers to trustees if pursuant to a contract entered into and substantially performed before 2pm on 22 March (the "relevant time") or any other contract entered into before the relevant time that is not an "excluded transaction".
"Excluded transactions" are those where:
- the unit trust scheme was not established at the relevant time, or contained no or virtually no assets, at that time; or
- at or after the effective time the contract is varied in a way that "significantly affects" the transaction. "Significantly affects" includes the substitution of a different purchaser, or the variation of the subject-matter of the land transaction or the consideration for the land transaction; or
- rights under the contract are assigned at or after the relevant time; or
- the land transaction is effected in consequence of the exercise at, or after, the relevant time, of an option, right of pre-emption or similar transaction; or
- at or after the relevant time there is an assignment, sub-sale or other transaction (relating to the whole or part of the subject matter of the transaction) under which a person other than the contracting purchaser becomes entitled to call for a conveyance.
For the time being at least, the sale of units in an offshore unit trust outside the UK remains free of UK stamp taxes.