Customer Newsletter: Disadvantaged Areas Stamp Duty Exemption

In his Pre-Budget Report of 27 November 2001 the Chancellor of the Exchequer announced his Government's intention to implement the first phase of the stamp duty exemption relating to the purchase of property in certain designated disadvantaged areas of the UK, which will apply where the consideration, or premium for a lease, does not exceed £150,000. Relief will be available with effect from 30th November 2001.

This Newsletter has been designed to help you make an application for the exemption and sets out the information that we need from you in order to deal with your document promptly. If you have any questions about the exemption which are not answered in this Newsletter please telephone the Stamp Taxes Helpline where one of our staff will be pleased to assist you.

What documents are covered by the exemption?

The exemption applies to all conveyances and transfers of land or an interest in land, and to all leases of an interest in land, executed on or after 30 November 2001, where the land falls wholly or partly within one of the disadvantaged areas designated under The Variation of Stamp Duties Regulations 2001 and the consideration for the transfer or the premium for the lease is more than £60,000 but not more than £150,000.

If a lease has a premium of £150,000 or less but also has a rent, is it exempt from stamp duty under this relief in respect of the rent?

No. The rent will be liable to duty even though the premium may be exempt from duty under this relief.

If VAT has been paid by the purchaser, in addition to the consideration or premium for the transfer or lease, does the £150,000 limit apply to the gross or net figure?

Stamp duty applies to the VAT-inclusive consideration or premium. If the VAT, when added to the consideration or premium, brings the total amount above the £150,000 limit the exemption will not apply.

Are conveyances, transfers and leases previously liable to £5 fixed stamp duty within the new exemption?

No. The exemption does not currently apply to documents liable to fixed duty which must continue to be stamped. The exception is for duplicate documents that do not attract stamp duty in excess of that paid on the original document. If the original is exempt from duty under the disadvantaged areas provisions the duplicate will not bear any duty either but must be sent to us to be denoted as a duplicate document.

Where can I find out whether the property I am buying, or dealing with on behalf of my client, is within one of the designated areas?

A list of the designated areas has been drawn up on the basis of electoral wards, except in Scotland where it is based on postcodes.

Will I need to know the postcode for the property?

Yes. We need everyone who claims this exemption to let us know the postcode for the property so that we can confirm that it is within a designated disadvantaged area.

Where can I find the postcode for a property if I do not already know it?

Postcode information is readily available for any given postal address from the Postcode Enquiry Line on 08457 111 222 or via the internet at www.royalmail.co.uk/quick_tools/postcodes/ Please note that if you are reading this newsletter on our web site, clicking on this link will take you to the Royal Mail homepage where you can link to the postcode finder page. If you enter the above URL in an internet browser yourself, please note that there is an underscore " _" between the words "quick" and "tools" which must be shown or the URL will not work.

What happens if the property I am buying is a piece of land with no buildings and it has no postcode designated?

If you are claiming the exemption on the document relating to such a piece of land you should tell us in your application letter that no postcode is available. You should include a map of the property with sufficient detail to pinpoint the location of the property and tell us which ward on the list of designated areas it falls within. If you know where the ward boundary lies you should indicate it on the map. We will check this information. Cases such as these are likely to take longer to process than those where a postcode is known.

What happens if the postcode for the property covers a number of properties, some of which are inside one of the qualifying areas and some of which are outside the area?

The legislation provides that where a single postcode straddles the boundary of a ward all properties covered by that one postcode will be considered to fall within the ward and will qualify for the exemption. If all the properties covered by one postcode are outside the ward boundary the exemption will not apply to any of those properties.

Does any certificate have to be included in the document?

Section 92(2) of the Finance Act 2001 provides that the exemption will only apply if the document is certified to the Commissioners as being an instrument on which stamp duty is not chargeable by virtue of subsection (1). It is suggested that an appropriate wording for the certificate is as follows:

"I/We hereby certify that this is an instrument on which stamp duty is not chargeable by virtue of the provisions of Section 92 of the Finance Act 2001"

While the legislation does not specifically require the certificate to be included as part of the document we suggest that it should be included in it. If the position is not certified to us, either in the document or separately in writing by the person submitting the document for stamping, exemption will not be granted.

Anyone falsely certifying a document with a view to obtaining relief that is not due will be committing a stamp duty fraud.

Do I have to send the document for stamping even though it is exempt from duty under Section 92?

Yes. Like most stamp duty exemptions the legislation requires the document to be lodged for formal adjudication if the exemption is to be granted.

Do I still need to supply a completed Particulars Delivered form with the document even though I am claiming exemption from duty?

Yes. If you would normally have had to provide a PD form with the document in the past you will still need to do so. Even though the document may be exempt from stamp duty there will still be valuable information which the Valuation Office Agency need which they glean from these forms.

When I claim exemption do I need to include a duplicate of the document?

Yes. As required by the legislation in all adjudication claims, you need to let us have a photocopy of the document on which the exemption is claimed. We will retain that copy for our records.

What is the position where the land concerned is on the boundary of a designated disadvantaged area and some of the property is within the area and some is outside it?

The legislation in Paragraph 1 of Schedule 30 of the Finance Act 2001 provides that in this scenario the full consideration is to be apportioned between the part inside and the part outside the disadvantaged area on a just and reasonable basis. Only the consideration in respect of the part outside the disadvantaged area is to be charged to stamp duty.

You must draw this to our attention when claiming partial exemption from duty and you must explain the basis on which you consider the apportionment of the consideration, including any VAT paid in addition to the consideration, to be a just and reasonable one.

Does the document need to include a £250,000 Certificate of Value where the consideration is £150,000 or less and I am claiming the exemption?

Yes. The certificate proves that the document is not part of any larger or series of transactions which would mean the relief was not appropriate.

Does the document need to include a £150,000 Certificate of Value where the consideration is £150,000 or less and I am claiming the exemption?

No. The legislation does not require there to be a £150,000 certificate in the document. However, it is important to remember that the legislation does provide that if a £150,000 certificate could not properly be included in the document, if that were one of the levels of certificate mentioned in the Finance Act 1999, the exemption is not appropriate.

In other words, where the document shows a consideration of £150,000 or less it can only qualify for exemption if it does not form part of a larger transaction or a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration exceeds £150,000.

What about phase two?

Under phase two, which is expected to start in 2002, the Government intends to significantly raise the level of stamp duty exemption, or abolish it entirely, in the designated areas but only in respect of non-residential property.

Summary Checklist - Disadvantaged Areas Stamp Duty Relief - Section 92 Finance Act 2001.


All instruments in respect of which relief is claimed must be formally adjudicated. To prevent delay in processing claims it will greatly assist if all the following information is supplied at the time the instrument is presented for stamping.

  1. The document contains a certificate confirming it is within the provisions of Section 92 Finance Act 2001.
  2. The full postcode for the property being transferred is supplied.
  3. The relevant PD form is enclosed, if appropriate.
  4. A full photocopy of the transfer document is provided.
  5. A copy of the contract or sale agreement is provided
  6. The document contains a £250,000 certificate of value.
  7. If the document is a lease, a payment in respect of the rent element is enclosed.

Provision of all the information above when the document is presented for stamping should enable claims to be processed without further correspondence.

You are reminded that if examination of the claim results in a decision that relief under Section 92 FA 2001 is not due, and, as a consequence, payment of stamp duty is made after the proper time, a charge to interest may be incurred.