The government is to table a Finance Bill amendment with retrospective effect from 1 April 2016 to ensure that the SDLT higher rate for additional residential properties will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by indivi
The government is to table a Finance Bill amendment with retrospective effect from 1 April 2016 to ensure that the SDLT higher rate for additional residential properties will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by individuals, where the purchase would otherwise be exempt from the higher rate.
An alternative finance funded purchase will involve two transactions: the first is the purchase of the property by a financial institution from the vendor; and the second is a further sale to the ultimate purchaser. SDLT relief would apply to the second transaction only, leaving SDLT chargeable on the purchase by the financial institution. A purchase funded by a mortgage would involve a single transaction. The government did not intend alternative finance transactions to be penalised in this way.
The amendment will, in effect, treat the first transaction as if it involved the ultimate purchaser, rather than the financial institution, for the purposes of the tests to determine whether the higher rates apply. In all other respects, the financial institution will be treated as the purchaser, including responsibility for filing and payment of the land transaction return.
Pending Royal Assent to the Finance Bill, which will give the amendment legal force, HMRC has advised affected purchasers to complete land transaction returns on the basis of the revised treatment.
The government is to table a Finance Bill amendment with retrospective effect from 1 April 2016 to ensure that the SDLT higher rate for additional residential properties will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by indivi
The government is to table a Finance Bill amendment with retrospective effect from 1 April 2016 to ensure that the SDLT higher rate for additional residential properties will not apply to financial institutions involved in alternative finance transactions used to fund property purchases by individuals, where the purchase would otherwise be exempt from the higher rate.
An alternative finance funded purchase will involve two transactions: the first is the purchase of the property by a financial institution from the vendor; and the second is a further sale to the ultimate purchaser. SDLT relief would apply to the second transaction only, leaving SDLT chargeable on the purchase by the financial institution. A purchase funded by a mortgage would involve a single transaction. The government did not intend alternative finance transactions to be penalised in this way.
The amendment will, in effect, treat the first transaction as if it involved the ultimate purchaser, rather than the financial institution, for the purposes of the tests to determine whether the higher rates apply. In all other respects, the financial institution will be treated as the purchaser, including responsibility for filing and payment of the land transaction return.
Pending Royal Assent to the Finance Bill, which will give the amendment legal force, HMRC has advised affected purchasers to complete land transaction returns on the basis of the revised treatment.
