SDLTM22505 - Reliefs: Compliance with planning obligations
General overview of FA03/S61
This relief is designed to relieve a developer from a potential double charge where they have entered into planning obligations in the course of a development.
It is common for a planning authority to require the developer to enter into planning obligations (for example, to build a new road or school or to make a financial contribution) as a condition of the authority granting planning permission for a development.
Where the obligations require extra building works, as opposed to a financial contribution, the developer will not usually want to retain that facility once it is finished. They will usually want to transfer it to a public authority to run from then on (for example, if a road is built the developer may transfer it to the local highways authority).
If the developer acquires the land from its original owner and, when the building is completed, transfers it on to a public authority, the developer may be subject to aneffective double charge.
Although the public authority will be liable for any Stamp Duty Land Tax on the latter transaction, it will usually seek reimbursement from the developer, as part of the arrangements for the granting of planning permission.
By claiming the relief, the public authority relieves itself of the Stamp Duty Land Tax charge, so relieving the developer from a double charge.
To obtain the relief, the public authority must obtain the chargeable interest from the developer in order to comply with a planning obligation imposed on the developer.
This means that the transfer to the public authority must be a condition of the planning permission. Transfers without this condition in the planning permission are not transfers in order to comply with an obligation, as there is nothing to with which to comply.
The other requirements are
- that the transfer to the public authority must take place within five years of the planning obligation being entered into or modified
- the purchaser must be one of a defined class of public authorities