Draft regulations on the Stamp Duty Land Tax (Zero-Carbon Homes Relief) Regulations 2007 have been laid before the House of Commons by Kitty Ussher, Economic Secretary to the Treasury, on 18 October.

These draft regulations follow the announcement in the 2006 Pre-Budget Report a year ago by the then Chancellor, Gordon Brown, that a stamp duty land tax exemption would be introduced for the vast majority of new zero-carbon homes in 2007. The relief will help “kick-start the market for new highly efficient technologies in homes, both for the fabric of the building and in the use of microgeneration ahead of 2016, and it sets a gold standard for green homes, “Ms Ussher said.

The draft regulations provide that, on the first acquisition of a new house meeting the zero-carbon standard  - as set out in the regulations -  costing up to £500,000, no stamp duty land tax is payable; and on the first acquisition of a new zero-carbon house costing in excess of £500,000 there will be a reduction of £15,000 to the stamp duty land tax bill. The exemption will be time limited for five years until 30 September 2012, but, she added, before the end of the time limit the Government will review the effectiveness of the relief and consider the case for an extension.

Ms Ussher pointed out that “following consultation on the draft regulations the definition of the zero-carbon standard for stamp duty land tax has been closely aligned with the zero-carbon requirements set out in Department for Communities and Local Government’s Code for Sustainable for Homes.” The rationale for this change is set out in the summary of responses to the consultation on the draft regulations and the Government’s own response to these, published on 18 October.

The tax relief will apply retrospectively from 1 October this year, meaning that anyone who completes a transaction on a new zero-carbon home between 1 October 2007 and the date on which the regulations come into force, will be entitled to claim the relief.

The Finance Act 2007 provides the Treasury with powers to make regulations granting relief from stamp duty land tax on the first sale of a new zero-carbon house.
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