Budget Notes


Who is likely to be affected?

1. Buyers of new zero-carbon flats, and Government departments carrying out assessments on whether a home qualifies for the relief.

General description of the measure

2. A regulation making power was introduced in Finance Act 2007 which brought in a time-limited relief from stamp duty land tax (SDLT) for new zero-carbon homes.

3. Legislation will be introduced in Finance Bill 2008 to extend this relief to cover new zero carbon flats. As a result of this change, existing secondary legislation will have retrospective effect to extend the relief for any new flats.

4. The measure will also ensure that where a Government department carries out an assessment of whether a home meets the zero-carbon standard it is to be permitted to charge a reasonable fee for providing such service. This part of the measure will have effect from later this year when regulations are laid.

Operative date

5. The relief for new flats will have effect on and after 1 October 2007. The relief will be time-limited and will expire on 30 September 2012.

6. The provision allowing Government departments to charge a fee for assessing whether a home meets the zero-carbon standard will have effect from a date to be appointed by Treasury order.

Current law and proposed revisions

7. Legislation for SDLT is in Finance Act (FA) 2003. Section 19 of FA 2007 introduced regulation making powers bringing a new relief to provide for zero-carbon homes.

8. Qualifying criteria for the relief are set out in the Stamp Duty Land Tax (Zero-Carbon Home) Regulations 2007 (SI 2007/3437) and require the level of carbon emissions from energy use in the home to be zero over the course of a year. As with other homes, the vendor of a new zero-carbon flat should provide a certificate confirming that it qualifies for the relief.

9. The relief will be eligible only to new flats which are liable to SDLT on their first sale. The relief will not be available on second and subsequent sales or on existing flats even when converted to meet the zero-carbon criteria.

10. The relief will provide complete removal of SDLT liabilities for all new zerocarbon flats up to a purchase price of £500,000. Where the purchase price of the flat is in excess of £500,000 then the SDLT liability will be reduced by £15,000. The balance of the SDLT liability will be due in the normal way.

11. The regulations -The Stamp Duty Land tax (Zero-Carbon Homes Relief) Regulations 2007 - came into force on 7 December 2007. Legislation to be introduced in Finance Bill 2008 will amend section 19 of FA 2007 so that the power to make regulations extends to include new flats. Further regulations will be laid after Finance Bill 2008 receives Royal Assent to provide for a fee to be charged by a Government department and to clarify the position in respect of certificates for any qualifying flats brought prior to the amendments to the section 58B of FA 2003.

Further advice

12. More details about how the current relief for new zero-carbon homes operates can be found on the HM Revenue & Customs website.

13. If you have any questions about this change, please contact Michael Lyttle on 020 7147 2792 (e-mail: michael.lyttle@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk