HMRC has updated its guidance to reflect the Budget 2018 announcement extending the relief to include purchases through approved shared ownership schemes where buyers choose to pay SDLT in stages, instead of electing for market value treatment. The extension will apply retrospectively from 22 November 2017.
The updated guidance outlines the application of SDLT rates for first-time buyers claiming relief in respect of the grant of a shared ownership lease as follows:
Where a market value election is made, the SDLT rates for first-time buyers apply to the relevant consideration under that treatment and no SDLT will be due on any rent paid under the lease. A market value election can only be made at the time the initial lease is granted by the scheme provider and, once made, cannot be withdrawn.
Where the purchaser chooses instead to pay SDLT in stages, the SDLT rates for first-time buyers will apply to the actual consideration (the premium) paid for the initial share purchased, provided the market value of the property as referenced in the lease is £500,000 or less. No SDLT will be payable on the rental payments. The relief applies only to the first transaction, when the lease is granted by the scheme provider.
‘Staircasing’ transactions (purchases of further shares in the property) will not lead to the withdrawal of the relief claimed on the grant of the lease, even if the total paid for all the transactions exceeds £500,000.
Where a market value election is not made, no further SDLT will be due until the purchaser increases their ownership share in the property over 80%. The normal rules for shared ownership, including the standard SDLT residential rates and method of calculation, will apply to the transaction that takes the purchaser’s ownership share over 80% and any subsequent staircasing transactions.
HMRC has updated its guidance to reflect the Budget 2018 announcement extending the relief to include purchases through approved shared ownership schemes where buyers choose to pay SDLT in stages, instead of electing for market value treatment. The extension will apply retrospectively from 22 November 2017.
The updated guidance outlines the application of SDLT rates for first-time buyers claiming relief in respect of the grant of a shared ownership lease as follows:
Where a market value election is made, the SDLT rates for first-time buyers apply to the relevant consideration under that treatment and no SDLT will be due on any rent paid under the lease. A market value election can only be made at the time the initial lease is granted by the scheme provider and, once made, cannot be withdrawn.
Where the purchaser chooses instead to pay SDLT in stages, the SDLT rates for first-time buyers will apply to the actual consideration (the premium) paid for the initial share purchased, provided the market value of the property as referenced in the lease is £500,000 or less. No SDLT will be payable on the rental payments. The relief applies only to the first transaction, when the lease is granted by the scheme provider.
‘Staircasing’ transactions (purchases of further shares in the property) will not lead to the withdrawal of the relief claimed on the grant of the lease, even if the total paid for all the transactions exceeds £500,000.
Where a market value election is not made, no further SDLT will be due until the purchaser increases their ownership share in the property over 80%. The normal rules for shared ownership, including the standard SDLT residential rates and method of calculation, will apply to the transaction that takes the purchaser’s ownership share over 80% and any subsequent staircasing transactions.
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