50.1 Introduction

Stamp duty is a tax on property that is paid by the purchaser to the Commissioners of the Inland Revenue. The stamping of writs is governed basically by the Stamp Act of 1891. In order to ensure that documents are lodged with the Inland Revenue for stamping promptly, documents that are sent to the Inland Revenue more than 30 days after the execution date attract a penalty payment.

With effect from 1 December 2003 the existing stamp duty regulations are replaced by part 4 of the Finance Act 2003. Full information is provided under Stamp Duty Land Tax (below).

The following sections of the 1891 Act are of particular relevance to Registers of Scotland for applications received before 1st December 2003:

Section 5
All the facts and circumstances affecting the liability of any instrument to duty, or the amount of the duty with which any instrument is chargeable, are to be fully and truly set forth in the instrument.

Section 12
(1) Subject to such regulations as the Commissioners may think fit to make, the Commissioners may be required by any person to express their opinion with reference to any executed instrument upon the following questions:

(a) Whether it is chargeable with any duty;

(b) With what amount of duty it is chargeable.

(2) The Commissioners may require to be furnished with an abstract of the instrument, and also with such evidence as they may deem necessary, in order to show to their satisfaction whether all the facts and circumstances affecting the liability of the instrument to duty, or the amount of the duty chargeable thereon, are fully and truly set forth therein.

(3) If the Commissioners are of the opinion that the instrument is not chargeable with any duty, it may be stamped with a particular stamp denoting that it is not chargeable with any duty.

(4) If the Commissioners are of the opinion that the instrument is chargeable with duty, they shall assess the duty with which it is in their opinion chargeable, and when the instrument is stamped in accordance with the assessment, it may be stamped with a particular stamp denoting that it is duly stamped.

(5) Every instrument stamped with the particular stamp denoting either that it is not chargeable with any duty, or is duly stamped, shall be admissible in evidence, and available for all purpose notwithstanding any objection relating to duty.

Note: Following the repeal of section 74 of the Finance (1909-10) Act 1910, instruments effecting outright gifts or transfers for inadequate consideration are liable for stamp duty as follows, unless they bear an appropriate Exempt Instrument certificate (see Exempt categories at 50.5):

1. Outright Gift (i.e. no monetary consideration passes) – £5 being a ‘conveyance of any other kind’. For the time being, adjudication is obligatory (but adjudication is not required for documents effecting a conveyance or transfer on the break-up of a marriage).

2. Transfer for inadequate consideration (i.e. where the value of property exceeds the amount of the consideration) – CL on the consideration paid. Adjudication is not required.

Abolition of ad valorem duty on gifts applies to instruments executed on or after 19 March 1985 which are stamped on or after 26 March 1985.

Adjudication
In certain cases, the Inland Revenue will allow a writ which requires adjudication to be presented for registration before the adjudication process has been completed. In these circumstances, the writ must bear the adjudication number and be accompanied by a letter from the Inland Revenue allowing it to be registered. It is not sufficient for the agents to send to the Keeper a letter undertaking the return of the writ to the Inland Revenue after it has been registered.

Section 14
‘(4) …an instrument…relating to any property situate….in any part of the United Kingdom shall not…..be available for any purpose whatever, unless it is duly stamped….’

Section 15
‘(2) In the case of such instruments hereinafter mentioned as are chargeable with ad valorem duty the following provisions shall have effect:

(a) The instrument, unless it is written duly upon stamped material, shall be duly stamped with the proper ad valorem duty before the expiration of 30 days after it is first executed, or after it has been first received in the United Kingdom in case it is first executed at any place out of the United Kingdom, unless the opinion of the Commissioners with respect to the amount of duty with which the instrument is chargeable has, before expiration, been required under the provisions of this Act.’

As there is no power to recover a penalty for late stamping once a writ has been duly stamped, it is unnecessary for registration officers to scrutinise stamped writs to ascertain whether they have been stamped in time.

Section 17 (as amended by section 117 and schedule 17 of the Finance Act 1999)
If any person whose office it is to enrol, register, or enter in or upon any rolls, books or records any instrument chargeable with duty, enrols, registers, or enters any such instrument not being duly stamped, he shall incur a fine not exceeding £300.

Note: this section is the Keeper’s authority for refusing to register a writ unless it is duly stamped.

50.2 Date of execution

In conveyancing terms, the date of execution of a deed is the date upon which a deed is subscribed. For stamp duty purposes only, the date of execution is now defined as the date on which the deed is delivered. This definition resolves a long-standing debate about the meaning of the date of execution in Scotland in relation to stamp duty, but two complications remain. Firstly, delivery does not necessarily mean the handing over of the deed. A mere indication by the seller that they are bound by the terms of the deed can amount to delivery. (In practice, such an indication will usually take the form of handing over the deed to the purchaser in exchange for the purchase price). The other complication is that if the deed has been delivered subject to conditions, it will not be treated as executed until those conditions have been fulfilled.

The definition applies to documents executed (as defined) on or after 8 December 1993.

50.3 Stamping of writs

Parliament determines whether or not a writ is liable to stamp duty, and if so the amount payable. The threshold for transactions attracting stamp duty has changed considerably over the years. At present stamp duty is calculated on transactions where the consideration is over £60,000.

50.4 Finance Act certificates

Transactions with a consideration of £60,000 or less do not attract stamp duty. To obtain the exemption from duty, conveyances must contain an appropriate Finance Act certificate, first introduced by the Finance Act 1910. Certificates need not be in gremio and are also competent when endorsed on writs and subscribed by the granter(s) (but not by the agent), together with any consenter conveying their interest in the property. The signatures of consenters, such as heritable creditors or spouses under Matrimonial Homes legislation, are not necessary.

The statutory wording of the certificate is:

• ‘I / we certify that the transaction hereby effected does not form part of a larger transaction or of a series of transactions in the respect of which the amount or value or aggregate amount or value of the consideration exceeds £60,000.’

Stamp duty is charged at an abated rate on transactions where the total value exceeds £60,000 but is less than the amount specified in the relevant statute (see Stamp Duty Rates at 50.6). To take advantage of the abated rate, the deed must include a Finance Act certificate in the above style, but amended to state the relevant tax threshold.

The Inland Revenue recommends and prefers the full version of the certificate although the shortened version ending at the word ‘transactions’ is acceptable in sale situations. The certificate should conform reasonably closely to the statutory form. A double negative, for example, is not acceptable.

In voluntary conveyances where the stamp duty requires to be adjudicated and there is difficulty in accurately determining the value of the property, the Inland Revenue is prepared to accept a certificate in the following terms:

‘I/We certify that the transaction hereby effected does not form part of a larger transaction or of a series of transactions.’

50.5 Exempt categories

Before the introduction of the Stamp Duty (Exempt Instruments) Regulations 1987, many transactions attracted a minimum duty of 50 pence. Further, where the relationship between the granters and grantees were husband/wife, brother/sister those transactions and others required to be lodged with the Inland Revenue for adjudication.

The regulations apply to instruments executed on or after 1 May 1987 that effect the conveyance or transfer of property of any description that fall within the categories below.

1. The vesting of property subjects to a trust in the trustees of the trust on the appointment of a new trustee, or in the continuing trustees on the retirement of a trustee.

2. The conveyance or transfer of property, the subject of a specific devise or legacy to the beneficiary named in the will (or his nominee)*.
   *Note: Transfers in satisfaction of a general legacy of money should not be included in this category (see category D).

3. The conveyance or transfer of property which forms part of an intestate’s estate to the person entitled on intestacy (or his nominee)*
   .*Note: Transfers in satisfaction of the transferee’s entitlement to cash in the estate of an intestate, where the total value of the residuary estate exceeds that sum should not be included in this category (see category D).

   a)Appropriations in or towards satisfaction of a general legacy of money (section 84(4) Finance Act 1985).
   b)Appropriations in or towards satisfaction of any interest of a surviving spouse in the intestate’s estate (section 84 (5) Finance Act 1985).
   c)Appropriation in Scotland in or towards satisfaction of the right of a husband to jus relicti, of a wife to jus relictae or of children (including adopted children) or remoter issue to legitum (Section 84 (7) Finance Act 1985).

   Transfers within these descriptions are no longer required to be adjudicated if they are certified within category D.

4. The appropriation of property within section 84(4) of the Finance Act 1985 (death: appropriation in satisfaction of a general legacy of money) or section 84(5) or (7) of that Act (death: appropriation in satisfaction of any interest of surviving spouse and, in Scotland, also of any interest of issue).

5. The conveyance or transfer of property which forms part of the residuary estate of a testator to a beneficiary (or his nominee) entitled solely by virtue of his entitlement under the will.

6. The conveyance or transfer of property out of a settlement in or towards satisfaction of a beneficiary’s interest, not being an interest acquired for money or money’s worth, being a conveyance or transfer constituting a distribution of property in accordance with the provisions of the settlement.

7. The conveyance or transfer of property on and in consideration only of marriage to a party to the marriage (or his nominees) or to trustees to be held on the terms of a settlement made in consideration only of the marriage*.
   *Note: A transfer made to the husband or wife after the date of the marriage is not within this category unless it is made pursuant to an ante-nuptial contract, although it may fall within category L.

8. The conveyance or transfer of property within section 83(1) of the Finance Act 1985 (transfer in connection with divorce etc.)

9. The conveyance or transfer by the liquidator of property which formed part of the assets of the company (or his nominee) in or towards satisfaction of the shareholder’s rights on a winding-up.

10. The grant in fee simple* of an easement in or over land for no consideration in money or money’s worth.
    *Note: Category J is not relevant to Scotland; it is used in England and Wales.

11. The grant of a servitude for no consideration in money or money’s worth.

12. The conveyance or transfer of property operating as a voluntary disposition inter vivos for no consideration referred to in section 57 of the Stamp Act 1891 (conveyance in consideration of a debt etc.)*.
    *Note: Gifts of property within this category are no longer required to be adjudicated if they are so certified. Those transfers of property subject to or in satisfaction of a debt which are transfers on sale liable to ad valorem duty are not within this category.

13. The conveyance or transfer of property by an instrument within section 84(1) of the Finance Act 1985 (death: varying disposition)*.
    *Note: Transfers within this category are no longer required to be adjudicated if they are so certified.

50.5.1 Exemption certificate

To benefit from the 1987 regulations, agents must include an Exemption Certificate in place of the Finance Act Certificate.

The suggested form of words is:

‘I/we certify that this instrument falls within category ... * in the schedule to the Stamp Duty (Exempt Instruments) Regulations 1987.’

*Category letter A to M should be inserted.

An instrument falling within more than one category will be regarded as exempt if correctly certified for either category or both. The certificate must be included in, endorsed, or attached to the instrument. Endorsement after execution is permissible. Any attached certificates will require to comply with the Requirements of Writing (Scotland) Act 1995 for ordinary annexations (see chapter 13). Where the instrument effects a conveyance or transfer of land, the certificate should preferably not be attached to the instrument but be included in or endorsed upon it. An endorsed or attached certificate may be signed by a solicitor as agent, provided the signatory’s designation appears after the signature.

50.6 Stamp Duty Rates

Since 1997 there have been various changes to stamp duty payable on considerations over £60,000 and these changes are outlined in the following paragraphs.

1997 Budget

The Budget on 2 July 1997 increased the rate of Stamp duty payable and applies to documents executed on or after 8 July 1997.

1998 Budget

The budget on 17 March 1998 increased the rates of stamp duty on transfers of property for more than £250,000. The new rates apply to documents executed on or after 24 March 1998.

1999 Budget

The budget on 9 March 1999 proposed increases in the rates of stamp duty payable on the transfer of property for more than £250,000.

The new rates apply to documents executed on or after 16 March 1999.

Finance Act 1999

The Finance Act 1999 introduced new penalties and interest charges for deeds stamped late and provided that duties be rounded up to the nearest £5. It also increased the fixed stamp from 50p to £5. The types of deed involved are listed at the end of this chapter.

The new rates apply to documents executed on or after 1 October 1999.

New penalties for late stamping are applied to deeds executed on or after 1 October 1999 (section 109(1)). If executed within the UK, the deed must be stamped within 30 days after the date of execution (see Date of execution for the definition of ‘date of execution’ in this context). If executed outwith the UK, the 30 day period begins upon the first day of first receipt of the deed in the UK. If the deed is presented for stamping within one year after the end of the 30 day period, the maximum penalty is £300 or the amount of the unpaid duty, whichever is less. If the deed is presented for stamping later than one year after the end of the 30 day period, the maximum penalty is £300 or the amount of the unpaid duty, whichever is greater. Penalty is not payable if there is a reasonable excuse for the delay in presenting the instrument for stamping.

The Keeper assumes without further enquiry that any deed which has been stamped or noted by the Stamp Office bears the correct penalty.

Where instruments executed on or after 1 October 1999 are stamped late, in addition to any penalty charged, interest will be due on the unpaid original stamp duty (section 109(1)). The rate of interest is to be prescribed by the Treasury. Once calculated, the interest is to be rounded down to the nearest £5 and will only be payable if the rounded down amount is £25 or more. Interest will be payable whether or not there is good reason for the delay in stamping the deed.

Again, where the deed has been seen by the Stamp Office, the Keeper will assume, without further enquiry, that the correct interest charge has been paid.

2000 Budget

The budget on 21 March 2000 announced changes to Stamp duty payable on transfers of property for more than £250,000.

The new rates apply to documents executed on or after 28 March 2000.

50.7 Leases

The formula for calculating the amount of stamp duty payable on leasehold property is slightly different.

Stamp duty on the assignment of an existing lease is charged in the same way as freehold. On the grant of a new lease, duty is charged separately on the premium (at the sale rate as for a sale) and on the average annual rent (under a scale of rates varying with the length of the term). If duty is payable on both the rent and the premium under a lease, the stamp duty is calculated separately then added together, with the total rounded up to the next multiple of £5.

The rates in the table following are unaffected by the Finance Act 2000, which only affects new leases of up to 7 years duration (or of indefinite term). To help both tenants and landlords, the threshold for stamp duty charge was increased from £500 to £5000 on the annual rent. In leases of this duration, where no lease premium is involved, tenants will not need to have such leases stamped, and landlords will not need to have the counterparts stamped. The new rates apply to documents executed after 28 March 2000, unless the document results form the exercise of an option, an assignment, or further contract made after 21 March 2000.

No certificate of value is appropriate where the premium exceeds £500,000 and duty is payable at the rate of 3.5% rounded up to the next £5.

Note: if the average rental is more than £600, a certificate of value for £60,000 cannot be included in the document. A certificate of value of £250,000 may be included and duty will then be worked out at 1% on the premium.

The rate of duty payable will vary according to the length of the period. Here is a list of the different rates:

Example

A flat is leased for a premium of £125,625 on a 19 year lease at an average annual rent of £575. The amount of stamp duty is:

• Duty of 1% on the premium = £1,256.25

  Duty of 2% on the rent = £11.50

  Total = £1,267.75

  Rounded up to nearest £5 = £1,270.00

The rent for the whole period of the lease is added up and the total divided by the number of years (or part years) of the lease. If any part of the period has expired before the date of execution of the lease or date of conclusion of missives of let, this is not included in the calculation of the average annual rent.

Example

50.7.1 Agreements for lease

An agreement for lease is liable to stamp duty as if it were an actual lease. If a lease is subsequently granted which is in conformity with the agreement, or which relates to substantially the same property and terms of years as the agreement, the duty on the lease is abated by the amount of duty already paid on the agreement.

If an agreement for lease is made on or before 9 March 1999, but the lease granted as a result of the agreement is not granted until 16 March 1999 or later, the old rate of duty will apply to the agreement. The lease itself will also be liable if the agreement constitutes a binding contract to grant the lease. Any duty already paid on the agreement will be credited against the duty payable on the lease if the conditions in section 75 of the Stamp Act 1891 are met (agreements for not more than 35 years to be charged as leases).

50.7.2 Agreements to renounce leases

Deeds of renunciation are chargeable to ad valorem duty. But where there is no deed and a lease is surrendered or renounced by operation of law, up till now no liability for stamp duty has risen. From 8 December 1993, any renunciation of a lease, which is not a separate deed of renunciation, will attract stamp duty if the facts are represented in another document, e.g. a letter.

This is designed to close a stamp duty loophole which was being exploited south of the border and it is unlikely to have much relevance to the Agency. It applies only to voluntary renunciation by agreement between landlord and tenant; hence it does not affect the termination of leases by other means, e.g. irritancy. For further details on irritancies in leases, see Termination of leases.

50.8 Stamp duty exemption for disadvantaged areas

Section 92(1) of the Finance Act 2001 makes provision for an exemption from stamp duty on certain transactions in designated disadvantaged areas. This provision takes effect for deeds executed on or after 30 November 2001. 75 areas in Scotland have initially been designated, mostly within the major cities. The determination of whether a property lies in a designated area will be made by the Stamp Office according to postcode.

Since 10 April 2003, when the Stamp Duty (Disadvantaged Areas) (Application of Exemptions) Regulations 2003 took effect, the exemption has been applied differently for deeds executed on and after that date, depending upon whether the property affected by the conveyance or transfer is residential or commercial.

50.8.1 Deeds executed prior to 10 April 2003

Scope of exemption

The exemption applies to conveyances of subjects wholly or partly within designated areas at considerations exceeding £60,000 but not exceeding £150,000, in respect of both residential and commercial property. The exemption also applies to lease premiums within the same limits but not to any duty payable in respect of the rent in such a lease. Where subjects are only partly within a designated area the stamp duty will be calculated by apportioning the consideration between the part within the designated area and the remainder.

The exemption does not apply to any instruments subject to the £5 fixed duty.

Certification and adjudication of deeds

A deed must be certified to the Stamp Office as falling within the exemption. Whilst the certificate does not need to be within the body of the deed, the Inland Revenue recommended the use of a certificate within the deed in the following terms: -

"I / We hereby certify that this instrument is exempt from stamp duty by virtue of the provisions of section 92 of the Finance Act 2001"

Whether or not the deed contains such a certificate, it must be lodged with the Stamp Office for adjudication. If the Stamp Office are satisfied, the deed will be stamped with a denoting stamp which indicates that it has been subject to adjudication.

Registration implications

Every deed, bearing to benefit from the exemption, and executed on or after 30 November 2001, but prior to 10 April 2003, whether for residential or non-residential property, must bear a denoting stamp before it may be accepted for registration or recording. Where a deed is so stamped the Keeper will assume without further enquiry that it is correctly stamped. Where it is claimed that the deed benefits from the exemption but no denoting stamp appears on the deed, the normal procedures for incorrectly stamped deeds will apply.

50.8.2 Deeds executed on and after 10 April 2003

Scope of exemption

In respect of conveyances executed on and after 10 April 2003, the £150,000 limit for relief outlined at paragraph 50.8.1 continues to apply but only to conveyances or transfers of residential property, although it should be noted that the rental element of residential leases is also eligible for relief.

In contrast, full relief from stamp duty is available in respect of conveyances or transfers of commercial, non-residential property, executed on and after 10 April 2003, in consequence of the Stamp Duty (Disadvantaged Areas) Regulations 2003. For non-residential properties, such full relief is available for both the rental element of leases and for any premium. Where subjects are only partly within a designated area the stamp duty will be calculated by apportioning the consideration between the part within the designated area and the remainder.

Certification for residential property within disadvantaged areas

A deed must be certified to the Stamp Office as falling within the exemption. Whilst the certificate does not need to be within the body of the deed, the Inland Revenue (per Statement of Practice 1/2003) recommends the use of a certificate within the deed in the following terms: -

"I / We hereby certify that the transaction effected by this instrument does not form part of a larger transaction or series of transactions in respect of which the amount or value of the consideration exceeds £150,000 and that stamp duty is not chargeable thereon by virtue of the provisions of sections 92 and 92A of the Finance Act 2001"

Whether or not the deed contains such a certificate, it must be lodged with the Stamp Office for adjudication. If the Stamp Office is satisfied, the deed will be stamped with a denoting stamp, which indicates that it has been subject to adjudication.

Certification for non-residential property within disadvantaged area

A deed must be certified to the Stamp Office as falling within the exemption for non-residential properties. The Inland Revenue has recommended the use of the following certificate within the body of the deed:

"I / We hereby certify that this is an instrument in respect of non-residential property on which stamp duty is not chargeable by virtue of the provisions of section 92 of the Finance Act 2001".

Whether or not the deed contains such a certificate, it must be lodged with the Stamp Office for adjudication. If the Stamp Office is satisfied, the deed will be stamped with a denoting stamp, which indicates that it has been subject to adjudication.

Registration implications

Every deed executed on or after 10 April 2003 bearing to benefit from either the exemption for non-residential or residential property must bear a denoting stamp, indicating it has been subject to adjudication, before it may be accepted for registration. Where it does so, the Keeper will assume that it is correctly stamped without further enquiry. Where such an exemption is claimed but no denoting stamp appears on the deed, the procedures for incorrectly stamped deeds apply.

50.9. Intentionally blank

50.9.1 Unstamped writs

The Inland Revenue have agreed that, in certain cases, a disposition or notice of title may be stamped after it has been recorded. When sending in such a writ for recording, the agents must enclose a copy of the letter sent to them by the Inland Revenue agreeing to the subsequent stamping of the writ. In these cases, re-recording after stamping is not necessary.

Section 6 of the Administration of Justice (Emergency Provisions) (Scotland) Act 1979, provided that from 23 February 1979 until a date to be prescribed (28 June 1979) any writ liable to stamp duty might be recorded in the Sasine Register, the Register of the Books of Council and Session and the Personal Registers without the writ being duly stamped, provided that it was duly stamped within 3 months of its recording or such later time as the Commissioners of the Inland Revenue might allow.

50.9.2 Over-stamped writs

It is not the duty of the Agency to be concerned with any writ which is over-stamped. Any case of over-stamping should only be discussed with the agent on approval from Legal Services.

50.10 Conveyances to charities

Section 129 (1) of the Finance Act 1982 provides that where any conveyance, transfer, or lease is made or agreed to be made to a body of persons established for charitable purposes or the trustees of a trust so established or to the trustees of the National Heritage Memorial Fund, no stamp duty is chargeable on the instrument by which the conveyance, transfer, or lease, or the agreement for it, is effected, as from 22 March 1982.

Such instruments shall not be treated as duly stamped unless they are stamped with a stamp denoting that they are not chargeable with any duty.

50.11 Dispositions of licensed premises

Dispositions executed prior to 23 April 2002

The following paragraphs are taken from a circular, dated 16 December 1959, issued by the Inland Revenue for the guidance of solicitors:

In the case of a negotiated purchase of a licensed hotel or public house for a cumulo price covering heritage, goodwill and chattels, the stamp duty position is as follows:

There is authority for the view that the goodwill of licensed premises is in most cases wholly, or mainly, heritable and that in so far as it is heritable it passes to the purchaser by the disposition of the property whether it is expressly referred to in the disposition or not. However, in order to avoid the delay and inconvenience which is likely to arise if dispositions of licensed premises have to be lodged for adjudication of the stamp duty to enable an enquiry and valuation to be made by the District Valuer, it has been decided that where no special circumstances arise the case may be settled without adjudication on the basis explained below which concedes a measure of moveable or personal goodwill. In any dispute, of course, the facts would have to be determined.

(a) A disposition of the whole subjects of sale, i.e. premises, goodwill, and all moveable fittings, equipment, furniture etc., as detailed in the missives, is liable to ad valorem duty on the whole price agreed upon in the missives.

(b) a disposition of the premises and goodwill of the business without reference to corporeal moveables is charged with ad valorem duty on the total price agreed upon in the missives, less the part applicable to corporeal moveables.

(c) a disposition of the premises and of the ‘heritable goodwill’ or ‘goodwill of the business so far as heritable’ is chargeable with ad valorem duty on the price applicable to the premises and heritable goodwill.

(d) a disposition of the premises without any reference to goodwill is chargeable with ad valorem duty applicable to the premises and heritable goodwill.

A disposition in the form referred to in (a) and (b) above will be accepted for stamping immediately if it shows a consideration of 70% of the cumulo price shown in the missives. As an alternative, to meet the case of larger hotels and other licensed premises with valuable furnishings and moveable equipment, the part of the price applicable to corporeal moveables may first be deducted and ad valorem duty will then be accepted on a consideration representing not less than 75% of the balance. In such a case, the applicant must be prepared to justify the price allocated to corporeal moveables, for example, by producing an inventory, or an independent valuation.

This method of assessment concedes an element of moveable goodwill and is designed to ensure that duty is paid on a reasonable figure while avoiding the delay of enquiring in every individual case. It has no legal force as an apportionment of the price. The appropriate certificate of value to be inserted in the disposition is that based on the cumulo price (not on the 70% or 75%) less only the part of the price attributable to corporeal moveables (or ‘goods, wares and merchandise’) (See sections 34(1) and (4) of the Finance Act 1958).

The position in respect of missives is unchanged. Missives of sale of licensed premises and the licensed business carried on therein remain liable to conveyance on sale duty on the consideration attributable to goodwill.

Dispositions executed on or after 23 April 2002

With effect from 23 April 2002, all transfers of goodwill will be exempt from stamp duty. The most common situation that may be encountered involving goodwill is in dispositions of licensed premises where an apportionment of the purchase price is made between the heritable property and goodwill. Only the part allocated to heritage will be liable to ad valorem stamp duty, under the proviso that the apportionment must be just and reasonable. In most cases the deed will have been stamped but in the unlikely scenario of an apportionment in the disposition reducing the element of the purchase price liable to stamp duty below the threshold of £60000, the usual certificate of value will suffice.

In cases of doubt the deed can be referred to the Stamp Office.

50.12 Receipts endorsed on duly stamped writs

A receipt endorsed or otherwise written upon or contained in any instrument liable to stamp duty, and duly stamped, acknowledging the receipt of the consideration money therein expressed, or the receipt of any principal money, interest, or annuity thereby secured or therein mentioned is exempt from stamp duty.

50.13 Purchase of building plots

The Agency has been informed by the Inland Revenue that, where a builder has transacted to sell land and buildings under separate contracts, they are treated as a single transaction for stamp duty purposes. This type of transaction appears to be restricted to Wimpey Homes and associated companies. The Inland Revenue will accept as a basis for stamp duty, the price paid for the plot of ground plus the value of buildings, at the date of execution of the instrument of conveyance. For practical purposes, the date of execution of the instrument means the date upon which it was delivered to the purchaser’s agents, not the date upon which it was signed. This was previously dependant on the state of play at the time of completion of missives.

When an application contains such a deed for registration, it should be accompanied by a Wimpey certificate (or copy certificate) showing the value of the plot and the value of the partially erected buildings as at the date of the execution of the deed. Certificates must be produced and remain with the deed but need not be fiched. The Agency will accept the aggregate amount in the certificate as the basis for stamp duty, read along with the in gremio stamp clause without reference to the Inland Revenue. If exigible stamp duty has not been paid, however, the deed should be dealt with under normal arrangements.

Although this practice came into effect on 10 August 1993, it applies to documents executed (delivered) under agreements which were dated on or after 12 July 1993.

50.14 Statutory exemptions from stamp duty

There are a number of statutes which allow an exemption from stamp duty in specified circumstances. If legal examiners are unsure whether or not an exemption applies, the case should be referred to a senior caseworker for clarification.

The following is a list of Acts detailing further exemptions from stamp duty. Further details can be obtained from the Agency’s legal library.

(a) Church Building Act 1822 (c.72) : section 28

(b) Naval Agency and Distribution Act 1864 (c.24) : section 16

(c) Consecration of Churchyards Act 1867 (c. 133) : section 6

(d) The Finance Act 1946 (c.64) : section 50(c)

(e) National Heritage Act 1980 (c.17) : section 11

(f) Industry Act 1980 (c. 33) : section 2(2)

(g) Finance Act 1981 (c. 35) : section 107

(h) British Telecommunications Act 1981 (c. 38) : section 81

(i) Civil Aviation Act 1982 (c. 16) : section 59(2)

(j) Bankruptcy (Scotland) Act 1985 (c. 66) : section 25

(k) Insolvency Act 1986 (c. 45) : sections 190 and 378

(l) Finance 1987 (c. 16) : section 5(1)
The provisions apply to any instrument executed on or after 1 August 1987.

(m) National Health Service and Community Care Act 1990(c. 19) : section 61(3)

(n) Social Security Administration Act 1992 (c. 5) : section 188

(o) Further and Higher Education (Scotland) Act 1992 (c. 37) : section 58

(p) Museums and Galleries Act 1992 (c. 44) : section 8(2) and (3)

(q) Finance Act 1993 (c. 34) - regarding rent to loan –Scotland – section 203 (1), (2) and (3)

(r) Coal Industry Act 1994 (c. 21) : sections 26, 27 and 28

(s) Health Authorities Act 1995 (c. 17) : schedule 2 section 4(1)

(t) Merchant Shipping Act 1995 (c. 21) : section 221 and schedule 9

(u) Environment Act 1995 (c. 25) : section 119

(v) Atomic Energy Authority 1995 (c. 37) : sections 8, 23, 24 and 25 and schedule 3

(w) Limited Liability Partnerships Act 2000 (c. 12) : section 12

50.15 Refund procedure

Any question of refunding stamp duty due to over-payment is one between the agent and the Inland Revenue only. The Keeper can have no involvement. Any suggestion of re-recording or re-registering an already recorded/registered deed will not be entertained.

If the stamped deed has entered the Books of Council and Session, it will have been transmitted to the Keeper of the Records by the time that any application for refund is made. Once again, the Keeper is not involved.

Although writs held in the Land Register can be released, this should be to the agent to deal with the Inland Revenue direct. Writs should not be released direct to the Inland Revenue by Agency staff.

50.16 Stamp duty on exchanges

Guidance has been issued by the Inland Revenue in respect of excambions where the contracts were entered into on or after 30 Nov 1993. The guidance relates to:

• The circumstances in which equalisation/equality payments may or may not be disregarded for stamp duty purposes;

• The application of the £60,000 stamp duty threshold to exchanges;

• The treatment of sales where one property is sold and another property is given in part payment of the sale price.

50.16.1 Exchanges and equalisation (equality) payments

The 1994 Finance Bill introduced new rules for stamp duty on exchanges of interests in land or buildings. Under the new rules duty is charged upon each transfer. Where the consideration consists of property, its open market value will be taken as the consideration. For example, when a house worth £100,000 is exchanged for another also worth £100,000, stamp duty is charged at 1% on each side of the exchange. The £60,000 threshold is applied separately to each side. Thus if the value of one property is less than £60,000 and the appropriate certificate is endorsed upon the deed, then the instrument would not be liable for stamp duty in relation to the transfer of that property.

50.16.2 Equalisation (equality) payments

Where the market values of the two properties being exchanged are not equal, a payment of money may be given with the lower value property, so as to equalise the bargain. The treatment of such cases for stamp duty purposes will depend upon the facts and the effect of the relevant documents. Generally, where a new house is exchanged for a house worth £80,000, plus equality payment of £20,000, stamp duty liability for the part of the exchange dealing with the new house will be based upon £100,000. In respect of the house with a value of £80,000, where it is clear from the documentation that the old house has been transferred for the new house less the equality money of £20,000, the liability will be based on £80,000.

If there is a multiple exchange, for example, properties A and B are exchanged for property C, the transfer of properties A and B would be regarded as parts of a larger transaction. The £60,000 stamp duty threshold would not apply to either of them if the total consideration for both were more than £60,000. The threshold would apply separately to the transfer of property C.

50.16.3 Counter Dispositions

In some cases when a person offers a property for sale, he may receive the price from the buyer in the form either of money or partly of money and partly of the buyer's existing house. To take a typical example, a builder selling a £100,000 house may receive the price from the buyer in the form of the buyer's old house worth £70,000 plus £30,000 in cash. The cash price may also be called an equalisation payment. Stamp duty is charged on the consideration for the sale. Thus stamp duty liability would be based on £100,000, in respect of the transfer of the new house stamp duty. The transfer of the house to the builder is not regarded as a separate sale for the purposes of stamp duty purposes, and is thus not chargeable to duty ad valorem. It is liable to a fixed stamp of £5. When the exchanged house is subsequently re-sold by the builder any stamp duty will be based on the price paid at that time.

50.16.4 General

Often when assessing deeds arising from transactions that may be excambions, or may be counter dispositions, the Inland Revenue may examine the missives to decide what they consider the true intention of the parties. Therefore where the Stamp Office has examined an excambion or counter disposition, and stamped the same, it should be unnecessary to enquire further. However, in cases of doubt, the deed can be referred to the Stamp Office as normal.

50.17 Stamp duty on discount sales

Section 107 of the Finance Act 1981 provides that in sales of property at a discount, by any of the organisations listed below, the discount shall not be taken as part of the consideration for stamp duty purposes:

• Any Minister of the Crown

• A local authority or any trust under its control

• Scottish Homes

• A registered housing association

• A police authority

• A housing co-operative