Stamp duty calculation when legislation changes

Errado

There is a budget coming this Autumn which might impact on stamp duty for new buyers by lowering the first time buyers exemption from stamp duty which currently stands at 625000.

If one buys a new build and completes contract exchange before the budget but completion might not be until next May, is the stamp duty based on the stamp duty amounts/rules at contract exchange or the amounts/ rules at completion. 

Any guidance appreciated.

Hoenir

No one knows what the budget holds. Endless speculation is pointless. 

user1977

Generally the rules at exchange apply, but there's no overriding law which says so, it's just in the relevant legislation after each Budget.

Bookworm105

sometimes tax changes are retrospective, sometimes they are not
How good is your crystal ball?

DullGreyGuy

Errado said:

There is a budget coming this Autumn which might impact on stamp duty for new buyers by lowering the first time buyers exemption from stamp duty which currently stands at 625000.

If one buys a new build and completes contract exchange before the budget but completion might not be until next May, is the stamp duty based on the stamp duty amounts/rules at contract exchange or the amounts/ rules at completion. 

Any guidance appreciated.

The budget normally becomes law by the passing of a new Finance or Stamp Duty Land Tax Act, in most cases they just state that where it read £500,000 before in Schedule 6ZA it now reads £650,000 as per https://www.legislation.gov.uk/ukpga/2023/2/section/1 

If thats all they do then you need to check the effective date of the act and look at the modified act to see what date is used to apply it. As it stand its the date of completion that determines the tax due (see https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm07600) however in the next act they could make a larger change and not just adjust the levels but the point at which SDLT is set

Bookworm105 said:

sometimes tax changes are retrospective, sometimes they are not
How good is your crystal ball?

In principle thats true but not sure of any time that a retrospective increase in tax has ever been made... would be a headache for HMRC to administer if, for example, they retrospectively did away first time buyer relief and so they'd have to recalculate all purchase since 2017

user1977

DullGreyGuy said:

Bookworm105 said:

sometimes tax changes are retrospective, sometimes they are not
How good is your crystal ball?

In principle thats true but not sure of any time that a retrospective increase in tax has ever been made... would be a headache for HMRC to administer if, for example, they retrospectively did away first time buyer relief and so they'd have to recalculate all purchase since 2017

Technically many Budget announcements are retrospective in the sense that they're only brought into law some time later, but backdated to Budget day.

Bookworm105

DullGreyGuy said:

Bookworm105 said:

sometimes tax changes are retrospective, sometimes they are not
How good is your crystal ball?

In principle thats true but not sure of any time that a retrospective increase in tax has ever been made... would be a headache for HMRC to administer if, for example, they retrospectively did away first time buyer relief and so they'd have to recalculate all purchase since 2017

plenty of examples of retrospective tax legislation, although i grant mostly to do with eradicating tax avoidance schemes, not increasing the tax rate retrospectively:
section 94 Finance Act 2006 on notional payments
section 58 Finance Act 2008 on double taxation
section 45 Finance Act 2010 on the repo rules
Sept 2021 High Income Child Benefit Charge legislation made it possible for a discovery assessment to be applied (except for some cases already in front of a Tribunal)

and slightly more relevantly  SDLT retrospective legislation, introduced in 2013 and applied retrospectively to 21 March 2012  where the court found: "‘The government had made it perfectly clear that SDLT avoidance schemes…..would not be tolerated, and that retrospective legislation would be used to achieve that objective. The appellants can have been in no doubt about any of that, before they decided to take advantage of a scheme devised purely to circumvent the precise wording of section 45(1A) as it was before the legislative changes."