Finance Bill 2020-21: ATED and SDLT relief for housing co-ops

HMRC has announced relief for housing co-operatives from Annual Tax on Enveloped Dwellings (ATED) and Stamp Duty Land Tax (SDLT)

Housing co-operatives that acquire and own residential property valued at more than £500,000 are set to get relief from the additional property transaction taxes that will affect other companies and house purchasers.

ATED and the 15% flat rate of SDLT are charged on companies, partnerships with any company members and collective investment schemes which acquire and own an interest in UK residential property. The 15% rate of SDLT is charged on acquisition of residential property in England and Northern Ireland by such entities where the value of that property is more than £500,000. ATED is charged annually on the ownership of UK residential property valued in excess of £500,000 held by such entities.

Both taxes include a number of reliefs and exemptions aimed at certain types of ownership or use of a property such as property rental businesses, registered providers of social housing, charities owning property for charitable purposes. Some types of housing co-operatives, such as those which are not registered providers of social housing, do not currently qualify for a relief.

At the Spring Budget 2020, the government announced that it would introduce legislation in Finance Bill 2020-21 so that relief will be available to housing co-operatives.

This measure will come into effect retrospectively from 1 April 2020 for ATED, as well as allowing eligible housing co-operatives to claim an ATED refund for the 2020-21 chargeable period.

For 15% flat rate of SDLT, the measure will come into effect for transactions with an effective date (usually the date of completion) on or after Autumn Budget Day 2020 for residential properties located in England and Northern Ireland.

New reliefs from Annual Tax on Enveloped Dwellings and Stamp Duty Land Tax for housing co-operatives

By Philip Smith

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