The clause provides for the new method of calculating SDLT introduced by the Bill to apply to transactions where the effective date is on or after
4 December 2014. It introduces transitional provisions that apply in cases where contracts were exchanged before 4 December, but the contract was completed on or after that date. Under the rules, a purchaser may elect that the new rules do not apply. The election is made in a land transaction return, and must comply with any requirements specified by the Commissioners for Revenue and Customs.
I should clarify a remark made by my hon. Friend the Exchequer Secretary on Second Reading in response to a question asked by my right hon. Friend the Member for East Yorkshire (Sir Greg Knight). The requirements are set out in the HMRC guidance published on 3 December, and simply serve to explain how the taxpayer should make an election; they do not restrict the application of the legislation in any way.
An election for the transitional provisions to apply is made simply by self-assessing the relevant amount of tax due in the return, or by amending the return, which may be done within 13 months of the effective date of the transaction. The transitional provisions are designed to protect purchasers who, before the changes were announced, entered into a binding contract in the expectation that the old rules would apply. In practice, more than 98% of purchasers will benefit from, or at least be no worse off under, the new rules. The transitional rules will ensure that those who exchanged contracts before 4 December are not disadvantaged as a result of the changes introduced by the Bill.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Schedule agreed to.
The Deputy Speaker resumed the Chair.
Bill reported, without amendment.
Third Reading
5 pm