UK and International Tax news

Finance Bill 2021 And SDLT Surcharge For Non UK Residents

Friday 31st July 2020

Draft clauses for inclusion in the Finance Bill 2021 have recently been published and these cover in particular the proposed SDLT surcharge for non UK resident buyers of residential property, previously announced at the time of the 2018 Budget.

Draft Finance Bill clauses introduce new rates of SDLT for purchasers of residential property in England and Northern Ireland who are not resident in the UK. The new rates will be 2% higher than those that apply to purchases made by UK residents, and will apply to purchases of both freehold and leasehold property as well as increasing SDLT payable on rents on the grant of a new lease.

This measure will apply to land transactions with an effective date of 1 April 2021 or later. Where contracts are exchanged prior to 11 March 2020 but complete or are substantially performed on or after 1 April 2021, transitional rules may apply.  Transitional rules may also apply where a contract is substantially performed on or before 31 March 2021 but does not complete until 1 April 2021 or later.

Currently, purchasers of residential property located in England and Northern Ireland pay SDLT irrespective of where they live or their residence status. The government announced at Budget 2018 that it intended to increase the amount of SDLT payable by non-UK residents when purchasing residential property in England and Northern Ireland.

In February 2019, the government commenced a consultation on its proposals and published its “Stamp Duty Land Tax: non-UK resident surcharge consultation”. This explored options for implementing a surcharge on non-UK resident purchasers and ran until 6 May 2019.

On 21 July 2020, the government published a response to its consultation “Non-UK Resident Stamp Duty Land Tax Surcharge: Summary of Responses”, confirming its proposals in respect of the surcharge. The published clause and Schedule give effect to those proposals, which are intended to help make house prices more affordable, helping people get onto and move up the housing ladder in line with wider objectives on homeownership.

According to the Exchequer Impact note, the revenue raised is expected to be between £100m and £350m pa over the next five years, which will be used to tackle rough sleeping

If you would like more information on the above, please contact Keith Rushen on 0207 486 2378.


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