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UK Treasury Announces Stamp Duty Land Tax Regulations

by Robin Pilgrim, LawAndTax-News.com, London

22 December 2003


The UK Treasury on Thursday unveiled regulations designed to clarify the Stamp Duty Land Tax treatment of land transactions which form part of a Private Finance Initiative (PFI) project.

Stamp Duty Land Tax now applies (subject to some transitional provisions) to all 'land transactions' completed on or after 1 December 2003, and is designed to replace stamp duty, which has been abolished except for instruments relating to stock and marketable securities, and for instruments relating to some partnership transactions.

According to the Treasury, The Regulations clarify the Stamp Duty Land Tax treatment of certain land transactions in PFI projects. The Regulations apply to "qualifying transactions", defined as transactions between certain public and educational bodies ("qualifying bodies") and a private sector supplier under a global agreement which provides for:

- the provision of services or the carrying out of works by the private sector supplier;

- payment for those services by the qualifying body;

- the transfer of land or the grant (or assignment) of a lease by the qualifying body;

- the grant of a lease back to the qualifying body; and

- in some cases, the transfer of land (sometimes termed "Surplus Land") by the qualifying body.

The Regulations provide that where a transaction is a qualifying transaction:-

- neither the lease back to the public body nor the carrying out of works nor the provision of services is chargeable consideration for the transfer or grant of the lease by the qualifying body, or for the transfer of the Surplus Land (in other words tax will generally be charged only on any cash premium or rent paid by the private sector supplier);

- there is no chargeable consideration for the lease back (in other words there is no charge on the qualifying body); and

- the Stamp Duty Land Tax provisions relating to exchanges (which normally charge tax on the market value of the property) do not apply to qualifying transactions.

Speaking with regard to the new rules, Ruth Kelly, Financial Secretary to the Treasury, explained that:

"The Government recognises the importance of PFI transactions and the economic benefits which they bring. Having consulted at length with interested parties, our proposals will ensure that the treatment of these transactions under current stamp duty will be continued for the present under stamp duty land tax".


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