Duties

Stamp duty and stamp duty land tax (SDLT)

Rates

There are no changes to the rates of stamp duty and stamp dutyland tax apart from those noted below.

Rate thresholds for Leasehold properties

SDLT of 1% applies to leases where the premium exceeds £125,000 for residential properties or £150,000 for residential properties in disadvantaged areas and non-residential properties. A separate lease duty applies to lease rentals where the net present value of rent exceeds those thresholds. Where a payment is made of both premium and rent a special rule applies so that if the annual rent is more than £600, the normal threshold does not apply and SDLT is charged on the full amount of the premium at 1%. For transactions on or after 12 March 2008 the £600 threshold for this rule to apply is increased to £1,000 for non-residential properties. For residential properties, including those in disadvantaged areas, the previous rule will no longer apply and normal thresholds will apply in respect of premiums paid irrespective of whether rental is paid.

Administration

As from 13 March 2008 instruments transferring stocks and shares that were previously chargeable to £5 stamp duty will in future be exempt and will not have to be presented to HM Revenue and Customs for stamping. This will affect instruments subject to ad valorem stamp duty of 0.5% of the consideration given for shares of £1,000 or less and will also apply to the £5 fixed stamp duty charge for instruments transferring shares otherwise than on sale.

Notification threshold for stamp duty land tax

The threshold for notification of land transactions to HM Revenue and Customs will be raised to £40,000 from £1,000 in respect of non-leasehold transactions. Transactions involving leases for a term of seven years or more will only be notifiable where chargeable consideration other than rent is more than £40,000 or annual rent is more than £1,000.

Later in 2008, changes will be made to SDLT forms to allow agents to sign the declaration in the certificate that no SDLT is payable. In addition future changes will mean that it will not be necessary to complete a SDLT return or certificate that no SDLT is due where the transaction is below the notifiable threshold.

Anti- avoidance

Anti avoidance measures are introduced in relation to claims for SDLT group relief and alternative finance structures for transactions whose effective date is on or after 12 March 2008.

In addition further amendments are being made to legislation introduced in the Finance Act 2007 to tackle avoidance in relation to transfers of interests in property within property investment partnerships where there is no charge to SDLT.

Alcohol and tobacco products duty

Legislation will be introduced in Finance Bill 2008 to provide for the annual setting of duty rates for alcohol. Duty rates will increase by 6% in real terms for all alcoholic drinks. The impact of the changes on retail prices for typical alcoholic drinks and tobacco products is equivalent to:

•  55 pence on a 70cl bottle of spirits @ 37.5% abv
• 4 pence on a pint of beer
• 3 pence on a litre of still cider
• 14 pence on a 75cl bottle of sparkling cider
• 14 pence on a 75cl bottle of wine or made-wine
• 18 pence on a 75cl bottle of sparkling wine
• cigarettes: 11p on a packet of 20
• cigars: 4p on a packet of 5
• hand-rolling tobacco: 11p on 25g
• other smoking tobacco and chewing tobacco: 6p on 25g of pipe tobacco.

HMRC review of penalties for incorrect returns and failure to notify a taxable activity

For return periods ending on or after 1 April 2009, where the filing date is after 1 April 2010, the new penalty regime for incorrect returns introduced in 2007 for income tax, CGT, VAT, PAYE and NICs will be extended across all other taxes and duties. From 1 April 2009, the penalty regime for failure to notify HMRC of a new charge will be aligned across all taxes and duties.

The new provisions for incorrect returns will provide for penalties based on the amount of tax understated, the nature of the behaviour and the extent of disclosure by the taxpayer. There will be no penalty where a taxpayer makes a mistake but there will be a penalty of up to:

• 30% for failure to take reasonable care
• 70% for a deliberate understatement
• 100% for a deliberate understatement with concealment.

 Each penalty will be substantially reduced where the taxpayer makes a disclosure (takes active steps to put right the problem), more so if this is unprompted.