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SDLT: Appointment of New Trustee(s) where Trust Fund is Subject to Mortgage |
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Capital Tax Review by Matthew Hutton, MA, CTA (Fellow), AIIT, TEP Matthew Hutton MA, CTA (fellow), AIIT, TEP author of Capital Tax Review, highlights a recent point of clarification regarding SDLT on changes of Trustees where the Settlement holds mortgaged land.ContextConcern has been expressed that the strict wording of the Stamp Duty Land Tax (SDLT) regime (with, in particular, no prima facie distinction between legal and beneficial ownership) would make an incoming trustee of a settlement holding mortgaged land a ‘purchaser’ paying chargeable consideration equal to his pro rata share of the mortgage.Question and Answer posted on the Law Society’s WebsiteQuestionUnder the Stamp Duty (Exempt Instruments) Regulations 1987, a transfer of trust property to successor trustees on the appointment or retirement of a trustee was exempt from stamp duty (subject to incorporation of the relevant certificate in the document), regardless of whether there was some outstanding borrowing charged on the trust property such that the new and/or continuing trustees would take over responsibility for that borrowing from the retiring/former trustees.This category of transfer is not reproduced in the Schedule 3 list of land transactions exempt from charge. We cannot believe that there is a change of policy such as to tax the change of formal title on a change of trustees of a continuing trust where there is outstanding trust borrowing (seemingly, whether or not secured on the land being transferred). Can the Revenue please confirm the analysis below, publicly? The assumption of existing debt by the "purchaser" - which would seem to be the new and/or continuing trustees as they would be parties – is only chargeable consideration if it is "consideration given for the subject-matter of the transaction, directly or indirectly, by the purchaser or a person connected with him" in the first place - see paras 8(1) and 1(1) of Schedule 4. We do not believe any trust lawyer would regard incoming or continuing trustees as giving "consideration" of any kind for the transfer to them of the trust property formerly held in the names of their predecessors, or for that matter for the appointment or retirement as such either. On that basis, it would seem that the transfer is exempt under para 1 of Schedule 3 (no chargeable consideration) and can be self-certified. Is this agreed? Answer from Crispin TaylorI agree with your analysis.Application and CommentGood news! Specifically, it seems that the Stamp Office consider that trustees are treated by FA 2003 Sch 16 as a continuing body of persons, so that there is no land transaction on a change of trustees [contrary to what Sch 16 appears to provide, however].August 2005 Matthew Hutton MA, CTA (fellow), AIIT, TEP More InformationThe above article has been taken from Matthew Hutton’s Capital Tax Review, a quarterly update for professional advisers of private clients. For more information, visit http://www.taxationweb.co.uk/books/capital_tax_review.php.About the AuthorMatthew Hutton is a non-practising solicitor (admitted 1979), who has specialised in tax for over 25 years. Having run his own consultancy (latterly through Matthew Hutton Ltd) until 30th September 2000, he now devotes his professional time to writing and lecturing.Matthew Hutton’s Autumn Series of Estate Planning Conferences resume on 15 September 2005 in Stratford-upon-Avon. The dates and venues are listed below. SDLT ConferenceMatthew Hutton is running an SDLT conference in London on 31 October 2005. For further information, please visit TaxationWeb’s Tax Events Calendar: www.taxationweb.co.uk/taxeventsMatthew Hutton’s Autumn Series of ConferencesThursday 15 September - Stratford Manor, Stratford-upon-AvonTuesday 20 September - Lord Haldon Hotel, Exeter Tuesday 27 September - Spa Hotel, Tunbridge Wells Tuesday 4 October - Wood Hall, Wetherby Tuesday 18 October - Renaissance Hotel, nr Derby For further details, brochures and booking forms please contact Matthew Hutton: email – This e-mail address is being protected from spambots. You need JavaScript enabled to view it or telephone – 01508 528388. |
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About The Author  Mark McLaughlin is TaxationWeb's Co-Founder, Director and Technical Editor. He is a Fellow of the Chartered Institute of Taxation and a member of the Association of Taxation Technicians and the Society of Trust and Estate Practitioners. He lectures on tax subjects, is co-author of Tottel's IHT Annual and Ray & McLaughlin's IHT Planning, and Editor of Tottel's Tax Planning and Annual series. Mark's work has also been published in Taxation, Tax Adviser, Tolley's Practical Tax, Tax Journal and Simon's Weekly Tax Intelligence. Since January 1998, Mark has been a consultant in his own tax practice, Mark McLaughlin Associates, which provides tax consultancy and support services to professional firms. He publishes a regular 'Tax Update' e-Newsletter for clients and other professional firms. To receive future copies, contact Mark via his website. |
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Article Added Saturday, 27 August 2005 |
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