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HMRC internal manual

Stamp Duty Land Tax Manual

From
HM Revenue & Customs
Updated
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30/9/12)

Zero carbon homes relief is a relief from stamp duty land tax for new homes that meet a specified standard of energy efficiency.

The relief was announced at Budget 2007 and was introduced from 1 October 2007. The relief initially only applied to houses but was extended to cover all eligible flats bought from 1 October 2007 in August 2008.

Since 1 October 2007 all zero-carbon homes (including flats) under £500,000 are exempt from SDLT. Zero-carbon homes over £500,000 have their SDLT bill reduced by £15,000.

The legislation is at FA03/S58A and 58B. The definition of what a zero-carbon home is and how a home can be assessed for the relief can be found in The Stamp Duty Land Tax (Zero-Carbon Homes Relief) Regulations 2007which were laid in Parliament on 18 October 2007 and came into force on 7 December 2007. The legislation dealing with flats can be found in The Stamp Duty Land Tax (Zero-Carbon Homes Relief) (Amendment) Regulations 2008 which were laid in Parliament on 22 July 2008 and came into effect on 13 August 2008.

The Relief

The relief applies for SDLT due on the first acquisition of any dwelling which meets the criteria for zero-carbon homes between 1 October 2007 and 30 September 2012.

Total relief from tax is available for all homes that have a chargeable consideration of not more than £500,000. Where the chargeable consideration is more than £500,000 then the amount of tax chargeable is reduced by £15,000.

HMRC can refuse to give the relief if they have reasonable grounds to believe that the home does not meet the zero-carbon standard. Qualifying criteria for the relief are set out in the Stamp Duty Land Tax (Zero-Carbon Home) Regulations 2007 (SI 2007/3437) and require a zero-level of carbon emissions from energy use in the home to be zero over the course of a year. The vendor of a new zero-carbon home must provide a certificate confirming that the home qualifies for the relief.

Definition of zero carbon homes

Homes must be ‘zero carbon’ over the course of the year. They can be connected to mains electricity and gas but will have to come with sufficient additional renewable power to cover the average consumption of a home over a year.

This means that the fabric of the building will have to be insulated and built to very high standards (triple glazing windows and air-tight walls, for example.) And will need to incorporate renewable energy technologies.

Proof required that a home meets the zero-carbon homes standard

The vendor of a new zero-carbon home must provide a certificate confirming that the home qualifies for the relief. This must be issued by an accredited assessor. Details of who are accepted as accredited assessors listed in regulation 2 of the Stamp Duty Land Tax (Zero-Carbon Home) Regulations 2007 (SI 2007/3437).

The vendor will need to ensure that the home has been tested against the following criteria by an accredited assessor (details of what an accredited assessor is can be found at regulation 2 of the Stamp Duty Land Tax (Zero-Carbon Home Regulations 2007 (SI 2007/3437). Normally a new home will already have been tested by accredited assessors to assess their energy performance before they can be sold. Often the information obtained from that test can be used to establish whether the home meets the zero-carbon home standard or not, however, it may be necessary to do an additional test to establish that this is indeed the position in some cases.

The criteria that must be met are as follows;

Aspects of energy efficiency Evidence
   
Heat loss parameter (“HLP”). The HLP of the dwelling calculated in accordance with the approved methodology must be no more than 0.8 Watts per square metre Kelvin (W/m²K).
Dwelling CO2 emission rate (“DER”). The DER over the course of a year calculated in accordance with the approved methodology must be no more than zero kilograms per square metre (kg/m²/year).
Net CO2 emissions. The net CO2 emissions from the dwelling over the course of a year calculated in accordance with the approved methodology must be no more than zero kilograms per square metre (kg/m²/year).
 

Please note that if there is any dispute over whether or not a home meets this standard the purchaser will have to resolve such with accredited assessors as HMRC are only responsible for tax issues and will not be able to get involved in issues concerning the energy performance of building.

Making a claim

The land transaction return makes provision for a claim for zero-carbon homes - simply use code 30 in the relief’s box of the return.

The relevant section of the return must be completed and the return signed in order to claim the relief.

There is no need to send payment with the land transaction return in respect of a transaction on which full relief is being claimed.

If partial relief is claimed on a property where the chargeable consideration exceeds £500,000 the payment due on the tax in excess of the £15,000 relief should be submitted with the land transaction return.

Before making a claim customers are advised to satisfy themselves that the relief is due and that the relevant conditions have been met.