• It only applies to ‘residential property’. Thus it will cover a building which is used as a dwelling, suitable for use as a dwelling, or which is in the process of conversion to a dwelling at the time of purchase. It will also include land that forms part of the garden or grounds of such a building (up to the usual ‘permitted’ area, which is normally 0.5 hectare). However, a property that is partly residential and partly non-residential will not qualify for the exemption; with such mixed properties, you must apportion the consideration to each part and calculate SDLT due on each part separately, using the normal thresholds.
• You still need to submit a land transaction return (unless the consideration is less than £40,000). The general rule is that there is no requirement to submit a return if transactions are exempt from SDLT, but the Regs have been amended so that a return is still needed for a transaction covered by the new £175,000 exemption. Having said that, no land transaction is generally needed for a freehold purchase (or the assignment of a lease with an original term of at least seven years) provided the consideration is less than £40,000, or for the grant of a lease for a term of at least seven years (provided the annual rent is less than £1,000 and any premium is less than £40,000).
• There is no special form required for claiming the relief (ie simply complete the return as normal and in field 14, where you are asked to enter the total amount of tax due, either leave it blank or insert ‘zero’).

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