Reference Guides

Stamp Duty

50.18 Major Ownership Schemes

Some major ownership schemes provide for the purchaser to buy and obtain title to a portion of a property only (often 80% - the remaining 20% to be acquired at a future date). Dispositions of the remaining portion form part of a larger transaction and, therefore, any Finance Act Certificate must take into account the value of the whole subjects, not merely the portion conveyed.

As it may not be apparent from the conveyances themselves that an inappropriate certificate has been endorsed, all such deeds should be referred to the Controller (Stamps) for further enquiry, unless it is evident that they have already been exhibited to his office. (Further details on ownership schemes can be found in Shared ownership schemes).

50.19 Counter Dispositions

See Stamp duty on exchanges

50.20 Lifetime Annuity Schemes

As described in Lifetime Annuity Schemes, various schemes exist to provide extra income for retired homeowners by providing lifetime annuities financed out of their heritable property. In a typical scheme, a company buys a house at its full current value, the price being paid in the form of a lifetime annuity. The company grants a lease to the former owner for a nominal rent. The disposition granted by the former owner will be liable to ad valorem ‘conveyance’ or ‘transfer on sale duty’ by reference to the total amount of the annuity which will be payable during the period of 12 years after the date of execution (section 56(3) of the Stamp Act 1891). Because the Agency will not have access to the necessary schedules for such commutation, all dispositions should be marked by the Inland Revenue.

50.21 Duplicate Denoting Stamps

Where a deed has been prepared in duplicate, the original deed is stamped with red duty stamps to the value of the duty paid, while the duplicate document is stamped with a red stamp and the legend ‘Duplicate or Counterpart – original fully and properly stamped’ shown in blue ink.

50.22 Destinations in Building Society Reconveyances

When a purchaser has a disposition granted in his or her own favour, the purchaser can take a destination in favour of himself and his wife and survivor and the heirs of the survivor. When the disposition was taken with the purchaser’s consent in favour of a building society this could not be done and the destination could only be inserted in the ultimate reconveyance.

The question of whether such a destination attracted conveyance on sale duty as a gift, was raised with the Inland Revenue. Their reply (dated 23 January 1952), stated that if the disposition narrated that the purchaser and spouse were members of the building society, and the disposition was granted to the building society with the consent of the husband and wife, the insertion in the reconveyance of a destination in favour of husband and wife and the survivor and/or the heirs of the survivor, would not be regarded as attracting voluntary reconveyance duty.

If, however, only one spouse was a member of the building society and the disposition was granted to the building society with his consent only, a reconveyance in favour of the said spouse and the other spouse and the survivor and/or heirs of the survivor would attract voluntary conveyance duty on one half of the value of the property reconveyed. It was not considered that voluntary conveyance duty would be avoided by the insertion in the loan agreement of an obligation on the building society if called on to reconvey to the husband and wife and the survivor. If, however, the loan agreement was executed contemporaneously with the disposition to the building society, and contained a definite undertaking by the building society, that upon due payment of the loan, the subjects would be conveyed to the husband and wife, or to the husband and wife and survivor and/or heirs of the survivor, a reconveyance incorporating a destination to the survivor of husband and wife and the heirs of the survivor would not attract voluntary conveyance duty.

50.23 List of Stamp Duties

By section 14(4) of the Stamp Act 1891 a deed is liable to the payment of the stamp duty in force at the time when it is first executed. The list of stamp duties which follows has been agreed with the Inland Revenue. The list is not intended to be exhaustive. As a general rule, understamped writs on this list will be returned to Agents without submitting them to the Inland Revenue. If any doubt arises, however, owing to a variation from the standard form of any of the writs, they should be referred to the Inland Revenue. This list should not be shown or quoted as an authority to an Agent or member of the public.

50.24 Stamp Duty for various Deeds

By section 14(4) of the Stamp Act 1891, a deed is liable to the payment of the stamp duty in force at the time when it is first executed. The list of stamp duties which follows has been agreed with the Inland Revenue. The list is not intended to be exhaustive. As a general rule, understamped writs on this list will be returned to Agents without submitting them to the Inland Revenue. If any doubt arises, however, owing to a variation from the standard form of any of the writs, they should be referred to the Inland Revenue.

End of Topic