Plans to modernise stamp duty on land and buildings in the UK were announced yesterday in the wake of the 2002 Budget speech.
Building on the proposals announced by the Chancellor, the reforms include a range of measures to curtail stamp duty avoidance, as well as plans for a significant review of the stamp duty taxation system.
The changes to the stamp duty framework have been introduced to support the government’s e-business agenda, in particular the introduction of electronic conveyancing.
Transaction-based duty
The government intends to introduce revised procedures for administering a transaction-based stamp duty.
The legal documents recording the chargeable transfer will no longer drive the process, and stamp duty will be charged when payment, or other value, is given in satisfaction of an agreement concerning interests in UK land and buildings. It is anticipated that the current stamp duty documentation will be replaced by a standard notification form.
The proposals also identify a number of other changes, including plans to review the stamp duty charge on the grant of a new lease, and legislation to allow land registries to be satisfied that a “best estimate” of stamp duty has been paid (rather than the correct amount, as now) before allowing a transaction to be registered.
The Finance Bill 2002 will contain a number of the measures to discourage stamp duty avoidance, but legislation effecting a major reform of the stamp duty system is expected to be introduced and implemented next year.
Changes to accommodate the introduction of Land Registry electronic conveyancing systems will also be introduced at a later date.
Electronic conveyancing
The “working assumptions” are that the use of an electronic conveyancing system will eliminate the need to notify the Inland Revenue separately that a chargeable transaction has occurred, and that the payment of stamp duty will be made electronically via that system as a prerequisite for registration.
It is likely that paper-based conveyancing will continue alongside electronic conveyancing “for at least some years to come”.
Significantly, it is anticipated that, following the introduction of electronic conveyancing, changes will be made to the rule allowing payment of stamp duty to be made up to 30 days after liability has arisen for notification and payment.
The consultative document setting out the proposed reforms states that: “electronic conveyancing systems should result in notification and payment well within the 30-day limit, and in many cases simultaneous with the liability arising. There is no reason to allow the use of paper documents a cash-flow advantage, and so the time limit will need to be reduced for all transactions in due course.”
Full details of the proposed stamp duty changes are set out in the consultative document Modernising Stamp Duty on land and buildings in the UK.
References: Propert-e News 18/4/2002
