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HMRC internal manual

Stamp Duty Land Tax Manual

HM Revenue & Customs
, see all updates

Reliefs: Right to buy transactions, shared ownership leases etc: General overview FA03/S70 and FA03/SCH9

FA03/S70 introduces FA03/SCH9 which is dealt with in this manual at the following pages

Relief for right to buy transactions at SDLTM27010

Relief for shared ownership leases and rent-to-shared ownership lease schemes at SDLTM27020+

Relief for rent to mortgage and rent to loan transactions at SDLTM27070

Relief for shared ownership trusts and rent to shared ownership trust schemes at SDLTM27071+

Relief for right to buy transactions operates to limit the chargeable consideration for the transaction by disapplying the provisions relating to contingent consideration. This ensures that the chargeable consideration for the transaction does not exceed the discounted purchase price.

Special stamp duty land tax rules apply to shared ownership leases granted by local authorities, housing associations and certain other public sector bodies, or in pursuance of a preserved right to buy.

Shared ownership (“New Build HomeBuy” or “Social HomeBuy””) purchasers acquire a long lease, for which they pay a premium representing a percentage share of the property and rent in respect of the remainder. The purchaser may be able to make further capital payments (known as “staircasing”) and ultimately to acquire either the freehold reversion or a maximum leasehold interest.

The tenant has the choice of paying SDLT on either of two bases:-

  • as if the whole property was purchased at the outset (the “market value election”). In this case no further tax will be payable on staircasing transactions or the acquisition of the freehold reversion.
  • on the separate parts as each is purchased (at the market value of each part at the time of purchase). In this case reliefs apply to exempt certain staircasing transactions from tax and modify the application of the linked transactions rules.

Equivalent provisions apply to shared ownership trusts, which apply shared ownership arrangements to commonhold flats.

Under rent-to-shared ownership (“Rent to HomeBuy”) schemes, the purchaser occupies the property under an assured shorthold tenancy before the shared ownership lease is granted. FA03/SCH9 ensures that tax is due only on the grant of the shared ownership lease, or the declaration of a shared ownership trust, at the time the lease is granted or the trust is declared.

The reliefs for rent to mortgage and rent to loan give relief for certain purchases under the Housing Act 1985 and work by limiting the stamp duty land tax payable to that which would be payable if the chargeable consideration was that calculated under section 62 of the Housing (Scotland) Act 1987, rather than the actual purchase price.