The Chancellor has announced a number of measures affecting stamp duty as follows:-
Stamp Duty Reform
The Government have released a consultative document which seeks views on the detail of a new modern tax regime. Legislation will be included in the Finance Bill 2003 to reform stamp duty. The reform will build on the 2002 measures to tackle avoidance, and will:
- support the Government's e-business agenda, in particular the introduction of paperless electronic conveyancing, and
- update the framework of the tax, bringing it into line with more modern taxes.
Individual home-buyers and their agents will see no immediate effect, but the reform will help pave the way for purchases to be conducted electronically in the future, making the house-buying process faster and more efficient.
Stamp Duty Exemption for Transfers of Goodwill
For documents executed on or after 23 April 2002:
- Transfers of goodwill will be exempt from stamp duty. This will be seen as good news for individuals and businesses who buy businesses.
- Transfer documents relating only to goodwill no longer need to be stamped. Where property sold consists partly of goodwill and partly of chargeable property, an apportionment of the sale price, on a just and reasonable basis, will be required to determine the amount chargeable to duty.
- As for other exempt items transferred with chargeable assets, a form Stamps 22 will need to be completed, to show the apportionment of the purchase price between chargeable and non-chargeable items (if this information is not fully stated in an agreement for sale or other relevant documents).
Stamp Duty on UK land and buildings
Legislation will be included in Finance Bill 2002 to discourage a range of techniques currently used to avoid stamp duty on high-value property deals. These measures bring forward a fundamental part of the longer-term modernisation of stamp duty.
For documents executed on or after 23 April 2002, proposals have been made to:
- “claw back” group relief where UK property has been transferred from one company to another in the same group, and within two years the company in receipt of the property leaves the group.
- “claw back” the partial relief under Section 76 FA 1986 where a company acquires the whole or part of an undertaking of another company in exchange for shares in the acquiring company, the instrument includes UK land, and within two years control of the acquiring company passes to a third party.
- deny relief under section 76 where, in respect of an instrument transferring UK land, the acquiring company is under the control of a third party at the time the undertaking or part undertaking is transferred to the acquiring company, and arrangements are in place for the third party to receive the shares that are issued to the target company.
- extend the penalty regime for documents executed in the UK to documents (relating to UK land or buildings) executed outside the UK. Penalties for the late stamping of documents executed outside the UK will in future run from 30 days after the date of execution.
- bring contracts for the sale of interests in land with a consideration in excess of £10 million into charge, to tackle the avoidance of stamp duty on large deals through “resting on contract” – where companies deliberately do not complete a transaction in the traditional way to avoid paying stamp duty on the document that effectively transfers ownership of property.