Budget 2020 Bulletin – SDLT Update
When delivering its Budget on Wednesday, the UK Government confirmed that it will be introducing the Stamp Duty Land Tax (SDLT) surcharge for non-resident buyers of residential property in England and Northern Ireland.
After opening formal consultation on the measure in February 2019, the Government has now announced that the surcharge will be at 2%. This will apply on top of the existing 3% surcharge which applies to purchases of second homes – resulting in a potential top slice rate of 17% for high value purchases.
The surcharge will apply to transactions completed on or after 1 April 2021. There will be some transitional provisions to protect transactions which are completed after 1st April 2021 as a result of contracts which had been exchanged prior to the date of the UK Budget (11 March). We do not have the detail of these yet but typically such provisions will protect only the original purchaser under such contracts and not, for example anyone to whom the contract has been assigned. It is also usually important that such protected contracts are not varied if they are to be completed on or after 1st April 2021 without the new surcharge applying. Purchasers under contracts entered into between now and the introduction of the surcharge, where it is possible that completion might post-date 1 April 2021, should work off the assumption that the 2% surcharge will apply to them.
Purchases under contracts which complete before 1st April 2021 will not be subject to the new surcharge.
The Government are due to publish their response to the consultation on the surcharge in the coming days, which should provide more information on the technical aspects of the surcharge – in particular, what definition of non-resident HMRC will adopt and more certainty regarding the point in the transaction timeline it will be assessed.
This bulletin is intended to provide a first point of reference for current developments in aspects of the law. It should not be relied on as a substitute for professional advice.
If advice on a particular circumstance is required please contact your Boodle Hatfield lawyer.