Stamp duty is a tax levied on purchase transactions – generally on documents - first introduced in 1694, during the reign of William and Mary, towards paying for on the war against France". It was so successful that, although originally intended to last only for 4 years it continues to this day in one form or another. It was originally levied earlier abroad, probably in Venice and similar duties have been levied in the Netherlands, France and elsewhere.
During the 18th and 19th centuries, stamp duties were extended to cover much more mundane things such as newspapers, pamphlets, apprentices' indentures, advertisements, playing cards, dice, hats, gloves, patent medicines, perfumes, insurance policies, gold and silver plate and other things.
The attempted enforcement of stamp duty in the British colonies in America led to the outcry of "no taxation without representation" and helped lead to the American War Of Independence.
Originally it was a fixed amount, but in 1808 stamp duty on such things as transfers of land and shares, became a tax on the proportionate value of whatever was being transferred.
Stamp Taxes are now administered by HM Revenue & Customs but were originally dealt with by the Board of Stamps. Various other titles have collected it over the years. Since devolution Stamp Duty (at different levels) called the Land Transaction Tax is collected by the Welsh Government and Land and Buildings Transaction Tax (LBTT) by the Scottish Government. It is now paid under the Finance Act 1999 and 2003 in England but earlier Acts still relate.
Up to 1971, a tax was charged on cheques in the United Kingdom at the rate of one penny until 1918,it was raised it to twopence. The tax was abolished shortly before decimalisation.
Interestingly (to us anyway) it was payable on Attorneys and Solicitors Licences between 1785 and 1949.
Over the years the scope was much reduced to land transactions (including leases) dealings with shares and securities, partnership transactions and a few other specialised things. It was largely abolished in the UK from 1 December 2003 when Stamp duty land tax (SDLT) – still called Stamp Duty by most people. Stamp duty reserve tax (SDRT) was introduced on agreements to transfers of uncertificated shares and other securities in 1986, and with the growth of paperless transactions SDRT rather than stamp duty now applies to most transfers of shares and securities. Stamp duty remains in force for shares and securities that are held in certificated form which can only be transferred by using a physical stock transfer form, and runs in parallel to SDRT on agreements to transfer shares. Interestingly again, as it often is paid by offshore investors it creates an annual income of £1.5 billion to the UK.
It is beyond the scope of this article to go into the actual rates of tax but it is enforced by a return having to be made virtually straightaway after completion which your Conveyancing Solicitor in the UK does as part of the conveyancing process, with the Revenue issuing a certificate without which HM Land Registry will not register a land transfer rendering the land effectively valueless in the hands of the Transferor. Under Stamp Duty a stamp (or stamps) were endorsed on the actual document to confirm it was properly stamped. These days commercial properties are at different rates to residential and leases rates are at a fairly complex formula based on rents and premiums paid. Penalties are levied if returns or payments are late or wrong. There are a whole host of exemptions and reliefs each with their own, complicated rules. There have been short term holidays or other “fixes” to (intentionally or otherwise) distort the market.
There have been many critics of stamp duty over the years especially when it was the old “slab” system (so where you went over a certain figure you paid a percentage based on the whole increased price) which seemed, understandably, unfair on the Buyer and certainly distorted the market around the limits but in 2014 a fairer system was introduced which meant most paid less but some, over a certain limit paid significantly more.
So there you have it. Under one form or another it’s been around for about 325 years and seems to be showing no sign of going away (especially while the Government needs the cash). The old regime of stamp duty was fairly straightforward but the myriads of exemptions, information, reliefs and many pages (one used to do!) make this an administrative burden for Conveyancing solicitors in the UK for the foreseeable future, not to mention an additional cost for Buyers at a time when they have enough cost.
Nowadays, in the U.K you usually pay Stamp Duty Land Tax (SDLT) on the increasing value of the property price when you purchase residential property. Conveyancing solicitors in the U.K file the SDLT return on completion or shortly thereafter.
If you want to know how SDLT affects your potential transaction or whether you may be entitled to reliefs or exemptions contact us , your Property Solicitor in the UK at info@hb121solicitors.co.uk or on 01562 702655 NOW.
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