Partner Geldards
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SDLT surcharge kicks in from 1 April

A stamp duty land tax (SDLT) surcharge on the purchase of residential property by non-UK purchasers was widely expected, and that has been confirmed by the Chancellor.

11th Mar 2020
Partner Geldards
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Stamp duty Welsh taxes

A new 2% stamp duty land tax (SDLT) surcharge will apply to the purchase of residential properties in England and Northern Ireland by a non-UK resident purchaser with effect from 1 April 2021. The surcharge will apply in addition to the normal rates of SDLT that will apply to the purchase of such properties. 

SDLT only applies in England and Northern Ireland, whereas land transaction tax (LTT) applies to properties in Wales, and land and buildings transaction tax (LBTT) applies to properties in Scotland.

Land transaction tax

The Welsh government will have to decide whether they wish to bring in a surcharge for LTT for the purchase of residential property in Wales by overseas purchasers. A decision not to bring in an LTT surcharge could have an adverse effect on the funding settlement to be agreed between the UK government in Westminster and the Welsh Assembly.

Land and buildings transaction tax

The Scottish government will also have to decide whether they wish to bring in a surcharge for LBTT for the purchase of residential property in Wales by purchasers who live outside the UK, or perhaps even outside Scotland. A decision not to bring in an LBTT surcharge could have an adverse effect on the funding settlement to be agreed between the UK government in Westminster and the Scottish Parliament.

Some relief

A relief from SDLT was announced for housing co-operatives which will also benefit from a relief from the Annual Tax on Enveloped Dwellings (ATED).

Relief from the 15% flat rate of SDLT which applies to certain purchases of residential property costing over £500,000 will apply from the date of the Autumn Budget in 2020 where the purchase is in England and Northern Ireland. 

ATED, which applies on a UK wide basis, will be subject to relief for qualifying housing co-operatives from 1 April 2021 and a refund will be available for the tax year 2020/21.

Budget

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