UK: Another Chance For Community Led Housing Groups To Comment On SDLT And ATED ** Act By 28 September 2018**

Last Updated: 25 September 2018
Article by Emma Ridge

Set out below is a suggested budget representation on the impact of SDLT and ATED on co-operative societies.

Although SDLT (stamp duty land tax) and ATED (annual tax on enveloped dwellings) affect many corporate bodies such as CLTs and cohousing companies, the highest rate of SDLT and ATED itself impacts most severely on housing co-operatives because of the nature of the properties they acquire.  Set out below is some suggested wording for groups to submit to the Treasury by 28 September 2018.  It should be sent to:

Suggested wording for the submission:

Budget Representation – SDLT and ATED - Co-operative and Community Benefit Societies

This representation is made in respect of what we believe is an inadvertent and unfortunate consequence of anti-avoidance legislation in the Finance Act 2003 and the Finance Act 2013.

Stamp Duty Land Tax (SDLT) provisions

Section 214 of the Finance Act 2012 introduced Schedule 4A (Stamp Duty Land Tax: Higher Rate for Certain Transactions) into the Finance Act 2003. Schedule 4A states that higher rates of SDLT will apply if:-

paragraph 3(2)(a) The transaction is a high-value residential transaction, and
paragraph 3(3)(a) The purchaser is a company.

Higher rate stamp duty land tax is currently up to 15% of the chargeable consideration and high-value residential transactions are currently any transaction over £500,000. 

Annual Tax on Enveloped Dwellings (ATED) provisions

Part 3 of the Finance Act 2013 introduced ATED.  Section 94(2) of the Finance Act 2013 holds that:

Tax is charged in respect of a chargeable interest if on one or more days in a chargeable period:

(a)        the interest is a single-dwelling interest and has a taxable value of more than £500,000, and

(b)        a company, partnership or collective investment scheme meets the ownership condition with respect to the interest.

In essence, this means that if corporate bodies own residential property, then they may have to pay ATED.  Although there are exemptions from ATED, none are relevant here.


In this representation, we refer to both the SDLT and ATED provisions set out above as the Provisions.

The Provisions seem to be aimed at the likes of individuals seeking to avoid the higher rates of SDLT on second homes and investors acquiring via companies.  George Osborne was explicit at the time that the Provisions were introduced that they were intended to discourage second home ownership.

Co-operative and Community Benefit Societies

Co-operative and community benefit societies are societies that are incorporated under the Cooperative and Community Benefit Societies Act 2014 (Societies).  Section 100 of the Finance Act 2003 defines a company as including any body corporate and so this means that HMRC apply the Provisions to Societies. 

Societies are predominantly used for social purposes on a not for profit basis, either as mutual organisations or organisations that operate for the benefit of their community. They are also democratic, in the sense that one member has one vote regardless of his or her investment in the Society.  These principles are protected through registration with and oversight by the Financial Conduct Authority. 

Societies can be used for many purposes (the retail co-operative societies are an example) but a number of co-operative Societies seek to house their members in buildings owned by the relevant co-operative Society.  These housing co-operatives are most likely to be adversely affected by the Provisions.

Applying the Provisions to Societies does not seem to be what the Treasury intended at the time they were introduced and is contrary to the Government's own policy set out in, for instance, section 5 of A new deal for social housing.

We would urge the Treasury to exempt Societies from the Provisions by introducing an exemption into Schedule 4A (Stamp Duty Land Tax: Higher Rate for Certain Transactions) of the Finance Act 2003 and Part 3 (Annual Tax on Enveloped Dwellings) of the Finance Act 2013.  We would also urge the Treasury to adopt a retrospective extra-statutory concession so that any exemption introduced applies to Societies who have been affected by the Provisions.  To flesh this out a bit, we are only aware of one Society – a housing co-operative - that has been affected so far although we do know of others who are nervous about acquiring properties over the £500,000 threshold) although we imagine that the ATED aspect of the Provisions may be of great concern to a number of housing co-operatives who may have been established for decades.

To look at the specific areas that budget representations should consider:

  • Likely effectiveness and value for money – such a provision would be very effective in righting an inadvertent unfairness and it would be cheap to introduce.
  • Revenue implications for the Exchequer – we are not suggesting that this change is made to increase or decrease incomeas we think any impact will be negligible. As we say, we have only come across one Society who has already been affected since the introduction of the Provisions where the additional SDLT payable was around £50,000 and ATED around £3,000 per annum).  We are suggesting this because it is a fair thing to do.
  • Wider macroeconomic implications – it would align the Treasury with government policy which concerns itself with ensuring there is suitable affordable housing for its citizens.
  • Sectoral impact – housing co-operatives are those most likely to be adversely affected by the Provisions as it is housing co-operatives that often acquire buildings with a number of bedrooms (which tend to be high-value) because the members of that housing co-operatives will live together communally.  An exemption for Societies would ensure that housing co-operatives are not penalised for doing what they are intended to do.
  • Distributional impacts – none.
  • Administrative and compliance costs – they would be negligible as stamp duty land tax is a self assessment tax.  It may actually reduce some administrative costs in that HMRC may have fewer inadvertent wrongly self-assessed forms to investigate.
  • Legislative and operational requirements - an exemption for Societies should be introduced into Schedule 4A (Stamp Duty Land Tax: Higher Rate for Certain Transactions) of the Finance Act 2003 and Part 3 (Annual Tax on Enveloped Dwellings) of the Finance Act 2013.
  • Environmental impact – none.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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