Legal Q&A

The working assumption is that the land concerned is residential freehold property in England or Wales, and that no tax avoidance is in point. SDLT treatment of the first 40% transaction As set out in Practice Note: Land transactions, chargeable interests and chargeable transactions, a land transaction with no chargeable consideration (for which see Practice Note: SDLT chargeable consideration) is outside the scope of SDLT, an exempt transaction......

We proceed on the basis that the company is UK-resident and that the dividend is not being made between companies within the same group for tax purposes. When analysing the tax consequences for the distributing company, the initial enquiry is to determine whether the transaction sits within the statutory rules on loan relationships or, alternatively, within the corporation tax provisions dealing with chargeable gains. In the ordinary course, a loan note held by a company is regarded, for tax purposes, as a loan relationship, and is treated in line with that classification......

Assignment of a lease The disposal of a lease is ordinarily handled in the same manner as conveying a freehold, and any sum or premium given for the assignment (excluding a reverse premium) falls within the scope of stamp duty land tax ( SDLT). However, the incoming tenant’s acceptance of obligations under the lease—such as paying rent or complying with the tenant’s covenants—does not constitute chargeable consideration for SDLT purposes and is disregarded when assessing the tax charge......

Stamp duty land tax ( SDLT) Stamp duty land tax ( SDLT) applies to the chargeable consideration given for a land transaction. A land transaction arises where a chargeable interest is acquired. For SDLT purposes, chargeable consideration has a specific meaning and is set out in section 50 of the Finance Act 2003 ( FA 2003) and in FA 2003, Sch 4. It covers not just cash or money’s worth, but also other forms by which value is provided, whether directly or indirectly, to the land’s transferor......

For the purpose of this Q& A, we have assumed that: the asset concerned is a residential dwelling property A and B hold either a freehold estate, or a leasehold granted for a term exceeding seven years A occupies a different dwelling as A’s only or principal residence, in which A has a freehold or leasehold interest A and B are not civil partners of one another and/or are separated in circumstances that are likely to be permanent A is not acquiring B’s interest as part of any business activity of buying and selling dwellings carried on by A the trust to be declared by B in favour of A will take the form of a bare trust arrangement completion of A’s acquisition will take place on or before 31 March 2021 As A’s share of the dwelling, in monetary terms, is £225,000, A will need to provide...

Condition C Where the buyer is a private person, one requirement of the increased rates ( Condition C) is that, by the close of the completion day for their transaction, they hold a ‘major interest’ in a residence other than the one acquired. In some situations, this test is satisfied despite the buyer not holding any such interest at all......

Where an employee may hold potential claims against their employer under the Employment Rights Act 1996 (or under other employment legislation), or might otherwise have a claim for breach of contract, the parties can, in most circumstances, enter into a settlement agreement (previously called a compromise agreement) to bring the employment to an end on the terms specified in that document. Among other matters, the settlement agreement will set out and govern all sums and benefits due, or to be provided, to the employee by the employer......

Recognised growth market exemption from stamp duty and SDRT The recognised growth market exemption from stamp duty and SDRT covers securities admitted to trading on a recognised growth market, provided they are not listed on any market. Although people often say AIM shares are ‘listed on AIM’ or ‘ AIM listed’, they are in fact unlisted; it is therefore better to describe them as ‘ AIM traded shares’ or simply ‘ AIM shares’. They are classed as unlisted because they are not included in the UK official list. Under section 1005(3) of the Income Tax Act 2007 ( ITA 2007), a security admitted to trading on a UK recognised stock exchange counts as ‘listed’ only if it appears on the UK official list. Furthermore, section 99A(3) of the Finance Act 1986 confirms that the meaning of ‘listed’ in ITA 2007, s...

There are two lines of reasoning for how Brexit could shield the UK from the Financial Transactions Tax ( FTT) plans. The first is a policy-based case: the EU states that remain may shy away from a levy that would divert activity from the bloc towards a nimbler, post- Brexit UK, and so abandon the plans. The second, a narrower technical case, is that UK firms would fall outside the FTT once the UK is outside the EU. At present, neither case is especially strong, though the policy rationale appears the more persuasive of the pair to date overall......

Broadly, varying a (stamp duty) lease constitutes a stamp duty land tax ( SDLT) transaction. This is because the transaction’s effective date falls after the SDLT start date of 1 December 2003, and it is not undertaken under a contract concluded before 10 July 2003, the date on which the Finance Bill 2003 received Royal Assent. The fact that the lease being amended was granted prior to the implementation date does not alter this position......

This Q& A presumes the beverages are not provided as part of catering. The Value Added Tax Act 1994 ( VATA 1994) sets out the UK’s value added tax ( VAT) framework. For broader guidance on VAT, consult Practice Notes: What is VAT?, When does VAT apply? and When can a person recover VAT? Zero-rated supplies A zero-rated supply still counts as a taxable supply, despite no VAT being levied on it. Accordingly, it differs from a VAT-exempt supply in VAT terms......

We are presuming that A is a person...

Pre-completion transaction rules ( PCT rules) The pre-completion transaction rules ( PCT rules) comprise several defined terms. For full further detail about them, please consult Practice Note: SDLT—pre-completion transactions— Defined terms under PCT rules......

Companies may face differing SDLT rates when purchasing various categories of property, including residential, non-residential (commercial premises), or mixed-use assets, depending on the nature of the acquisition......

This Q& A presumes the buyer is an individual...

Mary Ashley of 15 Old Square Higher SDLT rates apply where an individual buys a major interest in a single dwelling if conditions A– D are met at day‑end: A — consideration of £40,000 or more B — not subject to a lease with over 21 years unexpired C — purchaser owns another £40,000+ dwelling not so leased D — does not replace the only or main residence Dwelling includes a building or part used, suitable or being built/adapted as one dwelling, its gardens, grounds and benefiting land, and off‑plan contracts. Mixed‑use is excluded; no apportionment. As this freehold includes residential and non‑residential parts, it is mixed‑use, so the 3% surcharge should not arise. Sean Randall of Blick Rothenberg Limited The 3% applies to “higher rates transactions” in FA 2003, Sch 4ZA, paras 3–7, each requiring the main...

We take it that both buyer and seller are unconnected third parties, dealing at arm’s length for these purposes; the asset being conveyed is situated in England and Wales; and the effective date is the date of completion. Although the seller might have a charge secured over its interest in the property, that does not automatically mean the sale to the buyer is caught by that charge by itself. Whether it is depends on what the parties agree. As a rule, a transfer is not taken subject to an existing mortgage. The notes below consider a transfer that is subject to a mortgage, and one that is not. Transfer subject to seller’s existing mortgage Where a property is conveyed to a buyer subject to the seller’s subsisting mortgage, the purchaser assumes the seller’s liability......

15% rate of SDLT For guidance on the 15% SDLT rate, consult Practice Note: 15% rate of SDLT for high-value residential property transactions. You can also use the ‘ Related documents’ pod positioned on the right-hand side of this document, which offers links to additional reading and guidance on the 15% rate within Lexis®Library......

The higher rates of stamp duty land tax ( SDLT) These enhanced rates apply where an individual acquires a major interest in a single dwelling and, by the close of the purchase day, conditions A to D are satisfied: Condition A — the transaction’s chargeable consideration is £40,000 or more; Condition B — on the date of purchase, the dwelling is not held under a lease with more than 21 years left to run; Condition C — the purchaser already holds a major interest in another dwelling with a market value of £40,000 or above, which is also not subject to a lease exceeding 21 years......

Termination payments qualifying for £30,000 exemption As set out in Practice Note: Termination payments qualifying for £30,000 exemption, where a compensation payment for loss of office or employment is made in circumstances where it does not fall to be taxed as: earnings within section 62 of the Income Tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003) (see Practice Note: Termination payments taxed as earnings) benefits-in-kind (see Practice Note: How employment income is taxed—non-cash earnings or benefits) benefits from an employer-financed retirement benefits scheme employment-related securities (see: Employment-related securities—overview) disguised remuneration, where termination payments or benefits are provided by a third party (such as an employee benefit trust) rather than the employer (see: Disguised remuneration and EBTs—overview) restrictive undertakings (see Practice Note: Taxation of payments for restrictive covenants or undertakings) and for terminations for loss of office since 6 April 2018......