Certain circumstances mean that you may need to seek Stamp Duty Relief for property developers and builders, though generally, they are both subject to paying the tax.
If the builder were to acquire a residence from an individual, in exchange for a new property that the builder is constructing, the builder could then be potentially exempt from Stamp Duty on the purchase of the old home.
In order for this exemption to be activated, the seller of the previous property must have lived there for at least 2 years and used the property as their main residence for some time.
The seller must also intend to use the newly built property as their main residence.
Stamp Duty Reconstruction Relief
Stamp Duty reconstruction relief is a type of relief that allows the transferring of land and buildings between two companies. This is part of the transfer of undertaking in exchange for shares, where there is no change in ownership and without any charge to SDLT.
Reasons as to why Stamp Duty Reconstruction Relief may be withdrawn:
- Control of the acquiring company changes within three years of the transaction
- If arrangements are put in place within the three-year period for the company to change hands after the three-year period
Our tax specialists at CapEx Tax will be able to guide you through the transaction process regarding Stamp Duty Reconstruction Relief and provide adequate advice throughout to ensure a successful outcome.
In cases where there may be disagreements or hurdles to overcome in the negotiating process regarding the eligibility for Stamp Duty Reconstruction Relief, our tax specialists can assist or take over the negotiating process and can provide the correct documentation to support the claim for the relief.
Development Land Tax
Development land tax is an essential part of government legislation as this tax ensures that the development value of land accrues not to the owner of the land but instead to the community of the state.
Liability for Development Land Tax
Development land tax can be paid by any individual, company or even associations such as charities, trade unions or pension funds that own land in the United Kingdom. Transfers of land between spouses can give rise to liability, as husband and wife are treated as separate entities for development tax purposes. Additionally, the individual or company does not have to be a resident of the United Kingdom.
Lands & Buildings Under Development FAQs
Stamp Duty is calculated as a percentage of the property’s purchasing price, the rates and thresholds can vary depending on the intended use of the property and its value.
If you are a property developer, and you’re wondering what the latest SDLT rates are, we have you covered, check our SDLT changes explained page to stay updated on the latest Stamp Duty changes. If you have recently completed the transaction of acquiring a property and have not yet paid or submitted an SDLT form, you will be required to submit an SDLT return and pay off the Stamp Duty in 14 days after completing the purchasing process.
As a developer, if you are selling your properties, you will have to consider and apply SDLT for the buyers of the properties you have developed.
You should apply the most recent Stamp Duty rates and apply these to the individuals purchasing the residences.
In order for individuals to claim reconstruction relief, certain conditions must be met
- The property must be purchased for the sole purpose of reconstruction
- Reconstruction must be underway within three years of the purchase
- The property must not be used for any other purpose in between the purchasing and reconstruction process
- Keep hold of any evidence that showcases the purchase of the property and the reconstruction, this is vital as this evidence can be used in your claim and can boost the chances of succession