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HMRC internal manual

Inheritance Tax Manual

Has Stamp Duty exemption been claimed?

The introduction of Stamp Duty Land Tax (SDLT) has greatly reduced the number of cases where an IoV will need a stamp duty exemption certificate.

Up to now, we have taken the view that all instruments of variation were either liable to Stamp Duty, or should be certified as exempt from Stamp Duty under Categories L or M in the schedule to the Stamp Duty (Exempt Instruments) Regulations 1987. However, from 1 December 2003, any instrument effecting only a land transaction falls within the new Stamp Duty Land Tax regime and requires no certificate of exemption to be attached.

Moreover, it is now clear that an instrument of variation will only require an exemption certificate where stocks and shares are varied and the instrument itself, rather than a separate stock transfer form, acts as the form of share transfer. Such cases are expected to be very unusual. So, from now on, an IoV will hardly ever need an exemption certificate and you will very rarely need to raise an enquiry about this aspect.

For any instrument executed prior to 1 December 2003 but on or after 1 May 1987 the Stamp Duty (Exempt Instruments) Regulations 1987 (SI1987/516) apply. The Regulations apply to instruments executed on or after 1 May 1987 that contain as part of, or attached to, the document, a certificate to the effect that the document falls within one of the categories of transactions covered by the Regulations.

You will find that most instruments of variation will have been duly stamped or contain the appropriate exemption certificate to the effect that the document falls within categories L or M in the schedule to the Regulations.

But where an instrument has not been duly stamped, or does not contain the appropriate exemption certificate, you should apply the following procedure

  • any communication to the effect that IHTA84/S142 applies must contain a caveat in such terms as ‘provided the document is duly stamped and adjudicated, or the appropriate exemption certificate under the Stamp Duty/Exempt Instruments Regulations 1987 is attached’
  • if the parties are relying on the instrument to reduce the liability to Inheritance Tax, you must insist that the document is stamped, or the exemption certificate is attached, before giving effect to the terms of the instrument
  • in other cases, having raised the caveat above, the matter need not be pursued further.