The Finance Bill was published earlier this month, following on the Budget.
Usually a reasonable period is allowed for consideration of the Bill, but as
a consequence of the election being called for 5 May 2005 and the resultant
dissolution of Parliament on 11 April, the Finance Bill (No 2) 2005 was hurried
through Parliament and received Royal Assent on 7 April 2005 as the Finance
Act 2005. It will come into force in stages.
The Act represents a shortened version of the Finance Bill, containing 106
clauses and 11 Schedules, compared with the 172 clauses and 20 Schedules
contained in the Bill. Not all of the original provisions relating to SDLT
in the Bill have been enacted. However it is the government's intention (assuming
it is re-elected) to introduce a second Finance Bill after the election,
in which all those provisions not included in this truncated Act will be re-introduced.
Part 3 of the Act (sections 94 to 97 and Schedules 9 and 9) contains the
provisions relating to the changes made to SDLT, stamp duty and stamp duty
Section 94 and Schedule 8 provide for the extension of alternative property
finance relief from SDLT by amending section 72 of the 2003 Finance Act,
increasing the number of products eligible for this relief. They also
provide relief in
Scotland for situations where the financial institution and the individual
own the property in common and have a co-ownership agreement instead
of a lease.
Section 95 implements the raised threshold for SDLT on residential transactions
from £60,000 to £120,000 effective from 17 March 2005. The threshold
for SDLT on commercial or mixed transactions remains at £150,000.
Section 96 and Schedule 9 remove disadvantaged areas relief in relation
to non-residential property. Relief subject to a threshold of £150,000
still applies to residential transactions in designated disadvantaged
Section 97 relates to relief from stamp duty and stamp duty reserve
tax on the demutualisation of an insurance company. It restores that
in unit trusts and shares in open-ended investment companies that
are transferred or surrendered on demutualisation, inadvertently removed
in previous legislation.
The provisions relating to the various technical amendments to Part 4
of the 2003 Finance Act, which appeared in the Bill, are absent from
are the provisions affecting sale and leaseback arrangements, group
relief and acquisition relief, withdrawal of money etc from a partnership after
the transfer of a chargeable interest, the grant of a lease to a bare
trustee, variation of leases where any consideration in money or money's
than an increase in the rent) is given, and arrangement relating to
deposits in connection with the grant or assignation of a lease. A
number of these provisions came into effect immediately after the budget, but
have not been enacted, cease to have effect, therefore anyone who had
to pay SDLT as a consequence of the temporary effect of the Budget
well be entitled to a refund of the tax.
The Finance Act 2005 is available from the website of HMSO at