Policy paper

Stamp Duty Land Tax — acquisitions by registered social landlords and public bodies

Published 6 March 2024

Who is likely to be affected

Registered providers of social housing where a purchase is funded with the assistance of a public subsidy, and public bodies that purchase residential property in the UK worth over £500,000.

General description of the measure

The Stamp Duty Land Tax (SDLT) legislation includes an exemption for purchases of social housing by registered providers where the purchase has been at least partly funded by public subsidy. This legislation was out of date, meaning that sometimes such purchases were subject to SDLT, against the policy intention. This measure amends the out-of-date references and definitions relating to the exemption. The amendments will update the list of public subsidies to include public grants which have been permitted to be retained and recycled to qualify for the exemption. The measure also removes public bodies from the SDLT 15% higher rate charge. These changes overall will reduce the tax burden on public bodies and providers of social housing ensuring that public money being spent is used to its maximum effect.

Policy objective

The measure supports the government’s objectives on social housing by ensuring that public funds given to providers of such housing are fully utilised towards providing homes, rather than spent on SDLT. It ensures the SDLT legislation for registered social landlords is up to date and removes uncertainty for some registered providers of social housing such as local authorities in respect of their eligibility status, and for all registered providers where public subsidy is recycled for the provision of new social housing. This ensures that the exemption continues to operate as intended in supporting the provision of social housing.

The measure also removes public bodies from the scope of the SDLT 15% higher rate charge which is designed to target companies avoiding SDLT when purchasing residential property valued at over £500,000 for no commercial purpose. Public bodies are not using corporate or other envelopes to avoid SDLT and so are not engaging in behaviour that the 15% higher rate was designed to counter. This is consistent with the treatment of public bodies in relation to Annual Tax on Enveloped Dwellings (ATED), a separate anti-enveloping measure, which does not apply to public bodies, and reduces their payable tax.

Background to the measure

The measure was announced at Spring Budget 2024. No consultation has been held for the measure as it is entirely relieving and is a technical change to the SDLT legislation.

Detailed proposal

Operative date

The measure will apply to transactions in England and Northern Ireland where the effective date of transaction (usually the date of completion) is on or after 6 March 2024.   

Public bodies will be removed from the scope of the 15% SDLT higher rate charge where the effective date of transaction (usually the date of completion) is on or after 6 March 2024.

The measure does not apply to Scotland or Wales who operate their own land transaction taxes.

Current law

Section 71 Finance Act 2003 provides for the exemption applicable to acquisitions by registered social landlords.

Schedule 4A Finance Act 2003 sets out the 15% higher rate for certain transactions.

Proposed revisions

Section 71 Finance Act 2003 will be amended to remove out of date references, add recycled subsidy to the list of public subsidies and update the definition of a relevant housing provider to include local authorities.

Schedule 4A Finance Act 2003 will be amended to remove public bodies from the scope of the 15% SDLT higher rate charge which will take effect on and after 6 March 2024.

Summary of impacts

Exchequer impact (£million)

2023 to 2024	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029
negligible	-5	-5	-5	-5	-5

These figures are set out in Table 5.1 of Spring Budget 2024 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2024.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

This measure is not expected to have any direct impact on individuals as the exemption from tax can only be claimed by bodies who are a registered provider of social housing.

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not anticipated that there will be impacts on those in groups sharing protected characteristics.

Impact on business including civil society organisations

This measure is expected to have a negligible administrative impact on the 1613 registered providers of social housing, of which 224 are local authorities. One-off costs would include familiarisation with the changes. There are expected to be no continuing costs. 

This measure will potentially benefit registered providers of social housing and local authorities by clarifying their eligibility status for the SDLT exemption.

Public bodies will benefit by removing them from the 15% higher rate charge when buying residential property worth more than £500,000.

These changes overall will reduce the tax payable by public bodies and providers of social housing.

Customer experience is expected to remain broadly the same as it is now because the measure does not change how registered providers of social housing and public bodies interact with HMRC. 

This measure is not expected to impact civil society organisations.

Operational impact (£million) (HMRC or other)

There are no operational impacts.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be monitored through information collected from tax returns.

Further advice

If you have any questions about this change, contact the HMRC Stamp Taxes team at stamptaxes.budgetfinancebill@hmrc.gov.uk.