REV BN 01: Stamp Duty Land Tax: Raising The Threshold For Residential Transactions

Who is likely to be affected?

1. Anyone who enters into a land transaction relating to residential property where the chargeable consideration exceeds £60,000 but does not exceed £120,000.

General description of the measure

2. The measure raises the threshold for Stamp Duty Land Tax on residential transactions from £60,000 to £120,000.

Operative date

3. Any land transaction the ‘effective date’ of which (see below) is on or after 17 March 2005.

Current law and proposed revisions

4. Stamp Duty Land Tax is charged, at varying rates, on the consideration given for a land transaction. At present no tax is payable on transactions in residential property if the consideration does not exceed £60,000 and tax is payable at 1% if the consideration exceeds £60,000 but does not exceed £250,000.

5. This measure raises the threshold to £120,000. So tax will not be payable on transactions in residential property if the consideration does not exceed £120,000 and tax will be payable at 1% if the consideration exceeds £120,000 but does not exceed £250,000.

6. There is no change to the charge on residential transactions where the consideration exceeds £120,000. There is no change to the higher threshold of £150,000 for residential transactions in designated disadvantaged areas.

7. This change takes effect for transactions the ‘effective date’ of which is on or after 17 March 2005. The effective date of a transaction is normally the date of completion. However the effective date may be earlier than completion if a contract is ‘substantially performed’. Most residential contracts will not be ‘substantially performed’ in advance of completion.

8. When Stamp Duty Land Tax replaced stamp duty on land transactions on 1 December 2003 some contracts relating to land transactions remained outside Stamp Duty Land Tax, so that documents relating to those transactions remained subject to stamp duty. Although it is unlikely that many such contracts relate to transactions in residential property the threshold under stamp duty is also raised to £120,000.

Further advice

9. If you have any questions about this change, please contact Crispin Taylor on 020 7147 2793 or by e-mail at Crispin.Taylor@ir.gsi.gov.uk Information about Budget measures is available on the Inland Revenue website

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