Inland Revenue 23
17 March 1998
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STAMP DUTY
The rates of stamp duty on transfers of property (excluding
shares) for more than 250,000 pounds will be increased.
The new rates will be:
- 2 per cent where the price is more than 250,000 pounds
but not over 500,000 pounds;
- 3 per cent where the price exceeds 500,000 pounds.
The Chancellor's proposal will apply to transfers on or after
24 March, except for transfers made in pursuance of a
contract made on or before 17 March.
There will be no change either to the 60,000 pound threshold,
up to which transfers are free of stamp duty; or to the 1 per
cent rate which applies to transfers between 60,000 pounds
and 250,000 pounds. The 0.5 per cent rate of duty on
transfers of shares is unaffected by these proposals.
DETAILS
The new scale of rates
1. Under the Chancellor's proposals the rates of duty will
be:
1 pound per 100 pounds or part of 100 pounds if the
price is more than 60,000 pounds but not more than
250,000 pounds - no change;
2 pounds(previously 1 pound 50 pence) per 100 pounds or
part of 100 pounds, if the price is more than 250,000
pounds but not more than 500,000 pounds;
3 pounds(previously 2 pounds) per 100 pounds or part of
100 pounds if the price is more than 500,000 pounds.
Each rate of duty applies to the whole price. So for example
the duty on the purchase of a property for 80,000 pounds is
800 pounds; and a price of 260,000 pounds will attract duty
of 5,200 pounds.
Leases
2. Stamp duty on the assignment of an existing lease is
charged on the price in the same way as on the conveyance of
a freehold.
3. Duty on the grant of a new lease is charged separately on
the premium, at the same rates as for a sale, and on the
average annual rent (the rate depends on the length of the
lease). The new rates will apply to lease premiums in the
same way as to purchases. The separate scale of rates of
duty on rent will remained unchanged.
Other types of property
4. The present rates apply to documents transferring certain
other types of property, such as goodwill and patents, as
well as to transfers of land and buildings. The new rates
will apply to these transfers as well. But the present rates
of duty on transfers of shares and other securities (normally
0.5 per cent) will remain unchanged.
Commencement date
5. On the basis that the necessary Budget Resolution is
passed by the House of Commons before 24 March, the new rates
will apply to transfer documents executed on or after 24
March. But if the document is executed in pursuance of a
contract made on or before 17 March (Budget Day) the present
rates will apply instead. (In these cases the Stamp Office
may need to see the contract if the date of the contract is
not clear from the document itself.)
Agreements for lease
6. An agreement for lease is liable to stamp duty as if it
were an actual lease. But if a lease is subsequently granted
which is in conformity with the agreement, or which relates
to substantially the same property and term of years as the
agreement, the duty on the lease is reduced by the duty
already paid on the agreement.
7. Where an agreement for lease has been made on or before
17 March, but the lease granted as a result of the agreement
is not granted until 24 March or later, the old rate of duty
will apply to the agreement; and the lease itself will also
be liable at the same rate if the agreement constitutes a
binding contract to grant the lease. Any duty paid on the
agreement will be credited against the duty on the lease, if
the necessary conditions in Section 75 Stamp Act 1891 are
satisfied.
NOTES FOR EDITORS
The increase in stamp duty rates is expected to yield 390
million pounds in 1998-99, 470 million pounds in 1999-00, and
520 million pounds in 2000-01. About 25 per cent of the
yield is expected to come from residential property and about
75 per cent from land and commercial property. The change is
expected to affect about 30,000 transactions in residential
property and about 20,000 in land and commercial property, in
a full year.
INLAND REVENUE PRESS OFFICE