Introduction Background
9.It was made clear in Budget 2012 that the Chancellor of the Exchequer would not hesitate to use retrospective legislation to close down future stamp duty land tax (SDLT) avoidance schemes. These changes are being made in response to the continued use of such schemes.
10.Section 45 of the Finance Act 2003 provides, broadly, that there is only one charge to SDLT where the purchaser of an interest in land, before completing that purchase, sells on the interest in land to another person.
11.This measure is intended to address particular SDLT avoidance schemes that attempt to abuse section 45. The schemes involve an onward sale (a ‘subsale’ or other ‘transfer or rights’) which is not to be completed for a number of years. The intended result of the arrangement is that the immediate purchaser is left in possession of the property but bears no SDLT liability, while the transfer of rights is for a small amount of consideration and so falls below the SDLT threshold.
12.It is claimed that the transactions in these schemes fall within section 45 and that therefore no SDLT is payable on the initial purchase. The Government does not believe that section 45 produces the result claimed and these changes put this beyond doubt.
13.Further legislation was also introduced in Finance Act 2013 to reform the transfer of rights (subsale) rules in section 45 of Finance Act 2003. These further changes apply to transfers of rights entered into on or since the Finance Bill received Royal Assent, 17 July 2013.