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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Scope: How much is chargeable: Costs etc not treated as chargeable consideration

Some costs paid by the purchaser on the sellers behalf are chargeable consideration (such as vendors legal costs etc). Cost described in this part of the guidance are treated differently.

Costs under compulsory purchase legislation

Costs under section 23 Compulsory Purchase Act 1965 and compensation for disturbance and other matters not directly based on the value of land under section 5(6) Land Compensation Act 1961 are not chargeable consideration.

The Stamp Duty Land Tax (Amendment to the Finance Act 2003) Regulations 2006

The Stamp Duty Land Tax (Amendment to the Finance Act 2003) Regulations 2006 (2006 No 875) (‘the Regulations’) were laid before the House of Commons on 22 March 2006 and came into effect on 12 April 2006.

The Regulations supplement the provisions in Finance Act 2003 for determining what is and what is not chargeable consideration.

The Regulations deal with the following issues:

  • Payment of inheritance tax: the transfer of property to a person as a gift, or under a will or intestacy, may result in that person having a liability or potential liability, or agreeing, to pay inheritance tax. The Regulations provide that this liability or agreement is not chargeable consideration.
  • Payment of capital gains tax: the transfer of property to a person as a gift, or in other circumstances which do not amount to a bargain made at arm’s length, may result in that person having a liability or potential liability, or agreeing, to pay capital gains tax. The Regulations provide that this liability or agreement is not chargeable consideration. This exclusion does not, however, apply if there is any other chargeable consideration.
  • Payment by tenant of landlord’s costs: the Regulations provide that the payment by a tenant of a landlord’s reasonable costs on the grant, extension or enfranchisement of a lease is not chargeable consideration.
  • Agreement by tenant to surrender entitlement to the Single Farm Payment: it is common for agricultural leases to include an obligation on the tenant to surrender their entitlement to the Single Farm Payment to the landlord on termination of the tenancy. The Regulations provide that this obligation is not chargeable consideration.

As the Regulations clarify areas where there was uncertainty HM Revenue & Customs will accept returns, or amended returns, made on the basis that these provisions applied since the introduction of Stamp Duty Land Tax (SDLT).