LBTT and SDLT on pension fund in specie transfers
Property purchases in the United Kingdom are subject to either Stamp Duty Land Tax (SDLT) if the property is purchased in England, Wales and Northern Ireland or Land and Buildings Transaction Tax (LBTT) if the property is purchased in Scotland.
The amount of tax that is paid is dependent on the value of said property.
| SDLT Residential | Rate | SDLT Non-Residential | Rate |
|---|---|---|---|
| Up to £125,000 | 0% | Up to £150,000 | 0% |
| £125,000 - £250,000 | 2% | £150,000 - £250,000 | 2% |
| £250,000 - £925,000 | 5% | Above £250,000 | 5% |
| £925,000 - £1,500,000 | 10% | ||
| Above £1,500,000 | 12% |
| LBTT Residential | Rate | LBTT Non-Residential | Rate |
|---|---|---|---|
| Up to £145,000 | 0% | Up to £150,000 | 0% |
| £145,000 - £250,000 | 2% | £150,000 - £350,000 | 2% |
| £250,000 - £325,000 | 5% | Above £350,000 | 4.5% |
| £325,000 - £750,000 | 10% | ||
| Above £750,000 | 12% |
When it comes to pension arrangements that can hold commercial property SDLT and LBTT is still payable where there is a chargeable consideration. A chargeable consideration comprises of anything given in money or money’s worth for the subject of the transaction. This caused confusion when properties transferred Trustee ownership, an example being when the property was transferred from one pension provider to another.
For England, Wales and Northern Ireland where SDLT is applied and should you decide to transfer the ownership of property to a new pension provider there is no chargeable consideration and it would be exempt from SDLT, despite a change to trustee ownership the beneficial ownership would remain the same. I.e still an asset of the pension arrangement.
For properties in Scotland where LBTT is applied it was thought that following a bulletin that Revenue Scotland published in October 2016 the rules differed and it indicated that in specie transfers between pension funds would give rise to LBTT. This provided a stumbling block for pension savings and potentially would have meant paying LBTT twice, once on original purchase and again on transfer. Revenue Scotland in December 2017 has since concluded that while an in specie transfer is a land transaction it will not be generally considered as a chargeable consideration. It is therefore our understanding that it would exempt from LBTT complying with the same rules as SDLT.
Hartley Pensions Ltd offers a SIPP and SSAS product which allows commercial property and is Star Rated by Defaqto. For more information on these products and our fees can be located on our website at https://hartleypensions.com/pensions/
