SDLTM09681 | Scope: when is Stamp Duty Land Tax (SDLT) chargeable: higher rate charge for acquisitions of residential property by certain non-natural persons FA03/S55/SCH4A: Withdrawal of relief – qualifying housing co-operatives FA03/SCH4A/PARA5L

Withdrawal of relief – qualifying housing co-operatives FA03/SCH4A/PARA5L

Withdrawal of relief will occur if, on any day within the three-year control period (see SDLTM09655), the purchaser is not a qualifying housing body and immediately before that day it still owned the higher threshold interest, or a chargeable interest derived from it (i.e. it still owned an interest in the property).

‘Qualifying housing body’ means:

• a company that is a qualifying housing co-operative,

• a registered provider of social housing, or

• a registered social landlord.

Withdrawal of relief will also occur if, on any day within the three-year control period:

• the purchaser is not a qualifying housing body because it ceases to exist: (e.g. because it has converted or amalgamated with another person), and

• another person succeeds to the engagements of the purchaser, and

• either Condition A or Condition B is met.

Condition A is met where the successor is not a qualifying housing body on the day of succession, and immediately before that day the purchaser still holds the higher threshold interest, or a chargeable interest derived from it.

Condition B is met where the successor was a qualifying housing body on the day of succession but later, on a day during the remainder of the three-year control period, ceases to be so, and immediately before that day the successor still holds the higher threshold interest, or a chargeable interest derived from it.

The withdrawal provisions apply down the line of succession. For example, if within the three-year control period, the first successor ceases to exist, another person succeeds to the engagements of the first successor and either Condition A or B is met in relation to the second successor, the relief will be withdrawn.

Where relief is withdrawn because either Condition A or B has been met in relation to a successor, the relevant successor must make the further return and pay the additional SDLT.

Examples

1. Housing co-operative A purchases a chargeable interest in a dwelling on 10 March 2021. The interest costs £750,000. The 17% higher rate does not apply to the transaction because housing co-operative A falls within the definition of a qualifying housing co-operative. However, during the control period and whilst still holding the interest, housing co-operative A changes its rules to allow members to transfer their shares in the housing co-operative. The relief will be withdrawn at this point because housing co-operative A is not a qualifying housing body.

2. Housing co-operative B purchases a chargeable interest in a dwelling on 16 April 2021 costing £1 million. The 17% higher rate does not apply to the transaction because housing co-operative B falls within the definition of a qualifying housing co-operative. During the control period and whilst still holding the interest, housing co-operative B ceases to exist. C Ltd succeeds to the engagements of housing co-operative B. C Ltd is not a qualifying housing body, relief from the 17% higher rate will therefore be withdrawn as Condition A has been met. C Ltd must make the further return and pay the additional SDLT.

3. Housing co-operative D purchases a chargeable interest in a dwelling on 19 October 2021, costing £900,000. The 17% higher rate does not apply to the transaction because housing co-operative D falls within the definition of a qualifying housing co-operative. During the control period and whilst still holding the interest, housing co-operative D ceases to exist. Housing co-operative E succeeds to the engagements of housing co-operative D. The relief is not withdrawn at this point because housing co-operative E is a qualifying housing co-operative.

However, during the remainder of the control period and whilst still holding the interest, housing co-operative E changes its rules to allow members to transfer their shares in the housing co-operative. The relief will be withdrawn at this point because housing co-operative E is not a qualifying housing body. Housing co-operative E must make the further return and pay the additional SDLT.