Stamp Duty Land Tax (SDLT) Frequently Asked Questions
The following questions deal with the most common issues arising in relation to SDLT in Scotland, however, the HMRC website deals with these issues, and many more, in greater detail. You are advised to consult this site where appropriate. Links have been attached for convenience: www.hmrc.gov.uk
SDLT5 Certificates
Q. When is an SDLT Certificate required?
A. An SDLT 5 Certificate is required when the transaction is a notifiable transaction in terms of the Finance Act 2003. When a transaction is notified to HMRC an SDLT 1 is completed and HMRC issue an SDLT 5. Full details can be found at:
www.hmrc.gov.uk/sdlt/reliefs-exemptions/no-sdlt-return.htm
Q. What is a notifiable transaction?
A. A transaction is notifiable if it deals with a transfer of a major interest in land such as a conveyance or a lease for a chargeable consideration. Servitudes and other interests, such as rights of pre-emption, are also notifiable if they are transferred for a consideration above the current payment thresholds.
Q. Will the Keeper accept an application for registration without an SDLT 5?
A. Section 79(1) of the Finance Act 2003 prescribes that an SDLT 5 is required to be submitted in support of an application for registration, consequently the Keeper can only accept the application if it is accompanied by the said Certificate. Should an application not include the Certificate the application will be rejected.
Where the application is in respect of a transaction which falls outwith the remit of SDLT (eg., the registration of a Standard Security or a transfer for no consideration) or is otherwise exempt (eg., less than £40,000) then the Keeper will not require sight of a Certificate.
The former practice of requiring an SDLT 60 Certificate for non-notifiable or exempt transactions has been discontinued and these are thus no longer required.
Q. Will the Keeper accept copies of an SDLT5?
A. No. The Keeper cannot accept applications accompanied by a either photocopied SDLT 5 or a certified copy of an SDLT 5.
Exemptions and Reliefs
Q. Do all property transactions attract SDLT?
A. No. Certain transactions are exempt from SDLT, notwithstanding their value, and need not be notified to HMRC. Such transactions might include those for no consideration:
- Transfers of property resulting from divorce or the dissolution of a civil partnership;
- Property bequeathed in a Will;
- Transactions where money is not given in exchange for the property/land;
- Freehold transactions or assignments of leases of less than £40,000;
- Grants of leases of seven years or more where the value is less than £40,000 and the annual rent is less than £1,000;
- Grants of leases less than seven years (or assignments of leases which were originally granted for less than seven years) where the total value of the transaction isn't more than the residential or non-residential SDLT threshold.
Please note that HMRC must otherwise be notified of all other property transactions on an SDLT return.
www.hmrc.gov.uk/sdlt/reliefs-exemptions/no-sdlt-return.htm
Q. Is an SDLT 5 required where a relief applies?
A. Yes. A transaction remains notifiable even where a relief applies. The Keeper will therefore require sight of an SDLT5.
Electronic Certificates
www.hmrc.gov.uk/sdlt/return/scottish.htm
Q. Will the Keeper accept an Electronic Submission Receipt/Electronic SDLT5 as an alternative to a paper Certificate?
A. The Keeper has accepted Electronic Receipts (the Electronic equivalent of the SLDT5) since 1 November 2006 when they were first launched by HMRC. An Electronic Receipt can be printed off and submitted to the Keeper in support of an application for registration. The Keeper will also accept those electronic Certificates produced by Third Party Vendors, however, these Certificates must pass an HMRC recognition process before they can be accepted by the Keeper.
www.hmrc.gov.uk/efiling/sdltsoft-dev.htm
Should an Electronic Certificate run to more than one page, each page must be submitted with an application for registration.
Q. If an Electronic Certificate is submitted with an application for Registration does the Keeper require sight of the paper version once it is received from HMRC?
A. HMRC will continue to issue paper SDLT 5 Certificates to every applicant for whom a return is made, be it on paper or on-line. However, the Keeper does not require sight of a paper Certificate if an electronic Certificate has been accepted with the application for Registration. The paper copy should be retained by the applicant or his Agent.
Voluntary Registration
Q. Is an SDLT 5 required when the Keeper consents to the voluntary registration of subjects in the Land Register?
A. When consenting to voluntary registration of a property, the Keeper will not require sight of either a Self Certificate or a Revenue Certificate where there is no transfer of ownership of the property being registered. In all other circumstances the Keeper will require the applicant to produce an SDLT 5 Certificate where appropriate.
Q. What are the current thresholds for payment of SDLT?
A. The amount of SDLT payable varies according to property type and the value of a particular transaction. The thresholds between 25 March 2011 and 5 April 2011 are £125,000 for residential property and £150,000 for commercial property. In the event of the breach of these thresholds, SDLT is charged at the appropriate rate on the whole amount paid.
A notable exception exists in relation to first-time buyers of residential property (between 25 March 2010 until, and including, 24 March 2012) where the amount paid is less than £250,000.
The threshold relating to properties bought in disadvantaged areas are £150,000 and to leases.
Please note that thresholds are apt to change with subsequent Budgets and any changes may not be immediately reflected here. The HMRC website should thus be consulted with regard to any pressing changes.
In the event that no tax is payable, a Certificate will be required if the transaction is notifiable. The Keeper requires an SDLT 5 for all notifiable transactions.
Deeds of Excambion
Q. What is the appropriate Certificate for a Deed of Excambion?
A. The Keeper will expect two SDLT 5 Certificates to be submitted in support of the application for registration given that the excambion comprises two transactions, unless the consideration is less than £40,000 in which case no Certificate will be required.
Notice of Title and links in title
Q. Will the Keeper accept an application for a Notice of Title without an SDLT 5?
A. Ordinarily, Notices of Title are submitted only to the Register of Sasines, although they may occasionally be encountered in the Land Register, for example, where Title is being completed following a Compulsory Purchase Order. This is an exception to the general rule provided in s. 3(6) of the Land Registration (Scotland) Act 1979. In general terms, a Notice of Title will be for no consideration and therefore will not require a Certificate. However, it is possible that a Notice of Title following a Compulsory Purchase Order will require to be notified to HMRC and in such an event the Keeper will require sight of the SDLT 5 when accepting an application for registration.
Q. Will an SDLT 5 be required where an application is made to update the Proprietorship Section of the Title Sheet other than following upon a sale?
A. It is not uncommon for links in Title to be submitted for registration in the Land Register as a dealing, for example, where the link in Title is a docquet transfer. In most cases there will be no consideration and consequently no Certificate will be required. The same is true for a Trustee in Sequestration taking Title under an Act and Warrant. Unless it is clear from the face of the links in Title that consideration consists of £40,000 or more, the Keeper will accept that no Certificate is required without further enquiry.
Please note that where the links in Title are being submitted in respect of an actual conveyance, no Certificate is required in respect of the links in Title. Rather a Certificate will be required in respect of the actual conveyance. For example, if the beneficiary/beneficiaries do not seek to update the Title Sheet but instead utilise the docquet purely as a link in Title (along with the Confirmation of Executors) in conveying the property, the Keeper will expect an SDLT 5 in respect of the sale transaction.
Transfers to a beneficiary under a Will or on intestacy
Q. Which SDLT Certificate is required when property passes to a beneficiary?
A. The acquisition of property by a person in or towards satisfaction of his entitlement under a will or on intestacy is an exempt transfer in terms of Schedule 3 of the Act and requires a Self Certificate. The transaction remains exempt even where the beneficiary takes on a debt secured on the property. A transaction following on the variation of a Will within two years of the death of the testator is also exempt.
Should a consideration of £40,000 or more be paid for the acquisition an SDLT 5 should be obtained.
Application to give effect to survivorship destination
Q. What SDLT evidence does the Keeper require in connection with an application to give effect to a survivorship destination?
A. Where an application is made to update the Proprietorship Section of the Title Sheet, to note the death of the proprietor or to give effect to the operation of a survivorship destination, the Keeper will not require sight of an SDLT Certificate.
Deed of Conditions
Q. Is a Certificate required in connection with a Deed of Conditions?
A. A Certificate is not required.
Transfers to Government Departments
Q. Is a Certificate required in connection with a conveyance in favour of a Government body?
A. While SDLT applies to public offices and Government departments in the same way as to private individuals and corporations, s.107 of the Finance Act 2003 prescribes that certain Government bodies are exempt from the charge. However, the exemption is a relief which must be claimed on an SDLT 1. Code 18 in box 9 of SDLT1 claims the relief. As such the Keeper will expect to see a Revenue Certificate.
www.hmrc.gov.uk/manuals/sdltmanual/sdltm32000.htm
Sub-sales
Q. Which Certificate requires to be submitted in connection with a sub-sale?
A. The provisions governing notification and certification of sub-sales are contained within s.45(3) of the Finance Act 2003. This section provides that 'the substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract arising from a subsequent transfer of rights shall be disregarded.' This means that in practice only one Certificate is required, namely a Certificate in respect of the transfer by the sub-seller to the party applying for registration or recording. The following examples illustrate the operation of section 45(3):
Example 1: A concludes missives to sell to B for £100,000. Before B takes Title he concludes missives to sell to C for £150,000, with the Disposition going direct from A to C with the consent of B. In terms of s.45(3) the purchase by B from A is not treated as a land transaction but rather the purchase by C is. When the Disposition by A to C, with consent of B, is presented for registration the Keeper will only require a Revenue Certificate in respect of the purchase by C. No Revenue Certificate will be required in connection with B since the purchase by B is not a land transaction.
Example 2: A concludes a contract for the sale of a house to B. B subsequently enters into a contract with C for the sale of the same property. The date of entry in both contracts is the same. On the date of entry, A grants a conveyance to B in exchange for payment of the purchase price and B grants a conveyance to C in respect of the purchase price. Only C takes possession of the property. Both dispositions will be submitted to the Keeper at the same time. Section 45(3) will apply and the Keeper will only require sight of a Revenue Certificate in connection with the Disposition conveying the property from B to C.
In order that the Keeper is aware that sub-sale relief applies to a deed or deed being presented for registration, solicitors are advised to append a covering letter to the disposition narrating that s.45(3) applies. Solicitors are further advised that it would also be of assistance if it were noted on the front page of the accompanying application form that the transaction is in respect of a sub-sale.
Photocopy certificates
Q. Is it acceptable to submit a photocopy of an SDLT 5?
A. No. The original Certificate must be submitted.
Leases
Q. Is a Certificate required for a Lease or an Assignation or Renunciation of a Lease?
A. The grant or assignation of a long lease is notifiable where the premium is £40,000 or more and where the rent is £1,000 or more per annum.
Please note that where an Assignation contains a reverse premium no Certificate is required.
www.hmrc.gov.uk/sdlt/calculate/leasehold.htm
Partnership deeds
Q. Does the Keeper require sight of an SDLT 5 where an interest in a Partnership is transferred?
A. There are special requirements for the transfer of property and the transfer of an interest in a partnership. However, as a general rule, the transfer of property into or out of a partnership is subject to SDLT and the Keeper will expect any such application to be accompanied by an SDLT 5. Where an interest in a partnership is transferred between partners (which may include the transfer of land) there are special provisions and no Certificate will be required. The full requirements are contained in Schedule 15 of the Finance Act 2003, as amended.
www.hmrc.gov.uk/manuals/sdltmanual/sdltm34800.htm
Register of Community Interests in Land
Q. Do applications to The Register of Community Interests in Land require to comply with the requirements of s.79 of the Finance Act 2003?
A. In terms of s.298(3) of the Finance Act 2004, the Keeper does not require a Certificate.
Deeds constituting Real Burdens under the Title Conditions (Scotland) Act 2003
Q. Which Certificate is required for a constitutive deed in terms of the Title Conditions (Scotland) Act 2003?
A. This will depend upon the type of deed being submitted for registration. If the constitutive deed is a disposition (whether it is a conveyance of the benefited property or of the burdened property) and the transaction is notifiable, an SDLT 5 is required. Separate Certification is not required in respect of the constitution of the real burdens.
Where the constitutive deed is a deed of conditions, or deed of constitution of real burdens, or an agreement declaring burdens affecting one property in favour of another property, then the Keeper does not require sight of a Certificate.
Notices under Title Conditions (Scotland) Act 2003
Q. Which Certificate is required for a section 50 Notice of Preservation under the Title Conditions (Scotland) Act 2003 or a section 80 Notice of Converted Servitude under that Act?
A. The Keeper does not expect a Certificate to be submitted in support of either an application for registration or a recording of a Notice of Preservation or a Notice of Converted Servitude.
Q. Which Certificate is required for a section 20 Notice of Termination under the Title Conditions (Scotland) Act 2003?
A. A Certificate is not required.
Minutes of waiver, discharges and variations of real burdens
Q. Is a Certificate required for a waiver or discharge of real burdens or discharge of a servitude?
A. If consideration does not exceed the zero rate threshold (currently £125,000 for residential property and £150,000 for commercial property) a Certificate is not required. If the consideration exceeds the zero rate threshold, a Certificate will be required.
Rights of Pre-emption
Q. Is a Certificate required in relation to rights of pre-emption?
A. SDLT is payable upon the acquisition of a right of pre-emption in respect of a land transaction. Any subsequent exercise of a right of pre-emption will incur a separate land transaction whereby SDLT will be payable. SDLT is charged on the consideration paid on this particular occasion along with the option price at the rate applicable to the total consideration. Credit will, however be given for any SDLT previously paid at the time of the acquisition of the right. A Certificate will only be required where the consideration breaches the relevant threshold.
www.hmrc.gov.uk/manuals/sdltmanual/sdltm01300.htm
Deeds of Servitude
Q. Is a Certificate required for a Deed of Servitude?
A. Where the consideration does not exceed the zero rate threshold (currently £125,000 for residential property and £150,000 for commercial property) a Certificate is not required. If the consideration exceeds the zero rate threshold, a Certificate will be required.
Land transactions involving multiple properties
Q. When making application to register land transactions involving multiple properties should more than one Certificate be obtained?
A. Where a number of properties are transferred as part of the same transaction, the purchaser need only make one SDLT return to HMRC. Similarly, if properties are transferred as part of a series of transactions or as a single scheme, they are described in s.108 of the Finance Act 2003 as linked transactions. This does not mean that the purchaser will only receive one SDLT 5. Rather they have the choice to obtain one Certificate for each individual property.
The Keeper's guidance is that where a number of properties are conveyed in one deed, only one Certificate with a schedule appended, listing the properties, is required. If the properties are each to receive a separate Title Sheet, intake staff will photocopy the Certificate along with the deed. Conversely, if a number of properties are being conveyed, each in a separate deed, a separate SDLT 5 should be obtained for each deed. However, a single SDLT 5 and schedule will also be acceptable.
Q. Is it acceptable to submit a certified copy of a Certificate and schedule when there is a land transaction involving multiple properties, some of which are situated in Scotland and some outwith Scotland?
A. A certified copy Certificate and schedule are not acceptable. When dealing with Land Transactions involving properties in Scotland and England, a separate Return and schedule should be requested for the Scottish properties. HMRC will supply a separate SDLT 5 and schedule where requested.
Q. Is it acceptable to submit an Electronic Revenue Certificate or an SDLT 5 for the registration of land transactions involving multiple properties?
A. It is acceptable to submit electronic SDLT 5 Certificates for the registration of land transactions involving multiple properties provided that, where one Certificate is being submitted for a number of properties, there is attached either:
(a) a schedule listing the properties for which registration is sought, or,
(b) in the case of an electronic SDLT5 issued by HMRC, it is accompanied by copies of the Return submitted to HMRC listing the properties for which registration is sought.
Land Transactions with more than two grantors or grantees
Q. Will the Keeper accept a Certificate showing only two vendors or purchasers when there are more than two granters or grantees in the accompanying disposition?
A. The Certificate is designed to show up to two vendors or purchasers. The Keeper accepts that in such cases not all vendors and purchasers will be disclosed on the accompanying SDLT Certificate. HMRC have advised that, when submitting a Return an SDLT2 supplementary return should accompany an SDLT1 when there are three or more vendors or purchasers.
SDLT Requirements for Compulsory Purchase Orders and General Vesting Declaration
Q. Does the Keeper require a Revenue Certificate where a Compulsory Purchase Order (CPO) and General Vesting Declaration (GVD) are submitted for registration?
A. In the event that a CPO and GVD are presented together, or when a GVD is presented on its own, the Keeper will require one Revenue Certificate. If a CPO is presented for registration and is not accompanied by a GVD a Certificate is not required.
Parties acting in a representative capacity for another
Q. Will the Keeper accept an SDLT 5 signed by another party acting on behalf of the applicant?
A. Yes. The Keeper will accept an SDLT 5 which has been signed by any of the following persons acting in a representative capacity on behalf of a purchaser:
- Trustees, guardians etc., of incapacitated persons;
- Parent or guardian of a minor;
- Personal representatives;
- Receiver appointed by a UK Court.
www.hmrc.gov.uk/manuals/sdltmanual/sdltm31900.htm
Pension Funds and Linked Transactions
Q. Will the Keeper require a Certificate 1 in relation to an application by a Pension Fund?
A. Where a pension fund purchases land/property it is subject to SDLT in the same way as any other purchaser would be, consequently SDLT is payable where there is chargeable consideration. Chargeable consideration, being money or money's worth, includes the transfer of assets and obligations from one pension fund to another (for example, the merger of funds and the transfer of land from the Trustees of one pension fund to the Trustees of another) and the transfer of obligations when in consideration of a defined monetary sum which is to be satisfied by the release of obligations by the former Trustees. The assumption by the transferee fund, or by the Trustees of the transferee fund, of obligations to provide benefits does not constitute chargeable consideration.
