Stamp duty: anti-avoidance proposals

The Pre-Budget Report reveals that the Government is planning to introduce anti-avoidance legislation in next year’s Finance Bill to ‘prevent the use of devices which seek to reduce the rate at which [stamp] duty is payable’.

This development needs to be seen in the context of the recent increases in the rate of stamp duty on conveyance or transfer on sale of most property. Stamp duty is now charged on the conveyance or transfer on sale of (for example) freehold land at up to 3.5%, compared with 0.5% for shares. A duty differential of 3% amounts to £30,000 on consideration of £1,000,000.

At present, the stamp duty code contains no ‘value-shifting’ legislation to prevent taxpayers from structuring transactions as purchases of shares rather than assets. Value-shifting rules have been found necessary in branches of tax law as diverse as capital gains tax and insurance premium tax. One feature which they have in common is complexity.