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HMRC internal manual

Stamp Duty Land Tax Manual

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HM Revenue & Customs
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Reliefs: Right to buy transactions, shared ownership leases etc: Guidance on the stamp duty land tax treatment of right to buy transactions

Right to buy is a policy maintained by the Office of the Deputy Prime Minister which allows public sector tenants to purchase property on the basis of length of occupancy.

Full details of the Office of the Deputy Prime Minister’s legislation is available on it’s website  under ‘Home’.

The Office of the Deputy Prime Minister determines two factors relevant to the stamp duty land tax treatment of a right to buy transaction.

  • The maximum discount allowed.

This is relevant to stamp duty land tax as it determines the price actually paid for property

  • The period of discount repayment.

If the property is re-sold within a specific number of years, currently 5 years, the difference between the price paid by the eligible tenant in the right to buy transaction and the re-sale price is payable to the body that originally held the property

The intention behind FA03/SCH9/PARA1 is to ensure that tax is payable on the actual consideration paid by the purchaser at the effective date of the transaction.

The market value of the property is not used to calculate the stamp duty land tax liability.

FA03/SCH9 also disapplies FA03/S51. This ensures that stamp duty land tax is not charged on the contingent consideration that would otherwise result from the period of discount repayment.

Sales at a discount by the public bodies defined in FA03/SCH9 are eligible for stamp duty land tax relief, but this only applies to the potential repayments to the vendor.

In some cases a tenant can maintain a preserved right to buy as defined by the Office of the Deputy Prime Minister.

The stamp duty land tax treatment of preserved right to buy acquisitions is the same as treatment of right to buy from a defined public sector body.

On form SDLT1 the code for the right to buy relief is 22.

For question 10 for freeholds or assigned leases and 22 and/or 23 for new leases the actual consideration paid by the purchaser should be entered.

The tax payable on this consideration should be entered in box 14.

The market value of the property should not be included anywhere on the form.