EXPLANATORY NOTE

This clause provides that the rates of stamp duty for transfers of land and buildings will be increased in cases where the price, or "consideration", exceeds £250,000. The new rates are 3% (up to £500,000) and 4% (above £500,000). They generally apply to transfers on or after 28 March 2000. But the old rates will apply where the document gives effect to a contract made on or before 21 March, unless the document results from the exercise of an option, a right of pre-emption, an assignment , or further contract made after 21 March. The change also applies to transfers of certain other property, such as goodwill and some forms of debt.

There is no change in the £60,000 threshold up to which transfers are exempt from stamp duty or to the 1% rate which applies to transfers over £60,000 up to £250,000.

The new rates apply to assignments of existing leases and to premiums on new leases in the same way as the current rates. Rates of duty on the rent under a new lease are unchanged.

The rate of duty applies to the whole price paid. So for example a purchase at £170,000 will attract duty of £1,700, and a price of £300,000 will give rise to duty of £9,000.All stamp duty rates apply to the whole price of a property. So for example the duty on a transfer of £170,000 is 1% of £170,000, or £1700; and a price of £300,000 attracts duty of £9,000.

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Subsection 1 amends paragraph 4 of Part I of Schedule 13 to the Finance Act 1999 to provide for a rate of 3% on consideration above £250,000 and not exceeding £500,000 (if the instrument is certified as not being part of a larger transaction or series of transactions), and for a rate of 4% on consideration above £500,000.

Subsections 2 and 3 are the commencement provisions. Under the general rule in Ssubsection 2, the section applies to instruments executed on or after 28 March 2000. But by subsection 3, the new rates section does not do not apply to an instrument giving effect to a contract made on or before 21 March 2000, unless either the instrument is made after that date in consequence of the exercise of a right, such as an option or pre-emption right, after that dat or e; or it transfers the property to, or vests it in, someone other than the purchaser, because of an assignment or further contract made after that date.

Subsection 4 deems brings the section to have come into force into force on from 28 March 2000.

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The estimated yield from the measure is £290 million in 2000-01. 95% of residential sales will be unaffected by it.

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