Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Stamp Duty Land Tax Manual

Application - Trusts and powers: Transfers between pension funds

The guidance on this page applies where there is a transfer of assets and obligations from one pension fund to another, e.g. on the payment of a statutory cash equivalent transfer value for an individual, or on a merger of funds.

The transfer of land from the trustees of one pension fund to the trustees of another is the acquisition of a chargeable interest under FA03/S48. This means it is within the scope of Stamp Duty Land Tax (SDLT).

The normal charge to tax under SDLT arises on the consideration given for the land transaction.

There are no special rules for pension funds. SDLT will only be due where there is chargeable consideration for the transaction.

In our view the assumption by the transferee fund, or by the trustees of the transferee fund, of obligations to provide benefits is not chargeable consideration.

If other consideration is given by the transferee fund, or trustees of the transferee fund, in the form of money or money’s worth then that will be chargeable consideration.

There would also be chargeable consideration if the transfer of obligations was in consideration of a defined monetary sum to be satisfied by the release of obligations by the former trustees.

Borrowing and Mortgages

A pension fund may borrow money and may grant a mortgage or other charge over land as security.

For SDLT purposes it is necessary to consider the borrowing and the mortgage separately in the context of a transfer described above.

Borrowing

If the transferee fund, or trustees of transferee fund

  • assume an existing liability of the transferor fund or trustees of the transferor fund to repay borrowing or
  • otherwise bring about the release of the transferor fund or trustees of the transferor fund from the debt and
  • they do so as part and parcel of such a transfer

then we will not treat FA03/SCH4/PARA8 as meaning that there is chargeable consideration given for the land transaction.

Mortgages

Mortgages and other legal charges are security interests and dealings with them, including their creation and release, are specifically exempt from SDLT.

Notification

A land transaction for no consideration is exempt from notification under FA03/S77. Where there are linked transactions and one element is liable for SDLT even though it is not notifiable but other transactions are notifiable then HMRC would expect the non-notifiable element of tax due to be added to the tax paid in the land transaction return for the notifiable element.

Acquisitions of land by pension fund trustees

Where pension fund trustees acquire land, otherwise than as part of a transfer described above, whether or not from another pension fund, SDLT is due on the consideration given in the normal way.

General guidance on acquisitions by Pension Funds can be found at SDLTM31800 onwards.