As expected, the government will introduce a stamp duty land tax (SDLT) surcharge for non-residents buying residential property in England and Northern Ireland to take effect from 1 April 2021. The surcharge will apply at a rate of 2% above the current residential rates (including the higher rates for additional dwellings and companies, the flat 15% rate and the first time buyers’ rates).
The government will shortly publish a summary of responses to the consultation which took place between 11 February and 6 May 2019 and will set out details of the new charge. It is expected to consult on draft legislation over the summer months and introduce the change in the Finance Bill to be published following the Autumn Statement.
Non-residents buying residential property in England and Northern Ireland. The consultation proposed that the charge applied to non-resident individuals and non-natural persons including companies, trusts and partnerships, as well as to UK-incorporated close companies with non-resident shareholders.
The proposed effective date is 1 April 2021. Transitional rules may impose the surcharge on contracts exchanged on, or after, 11 March 2020 which complete, or are substantially performed, after 1 April 2021.
The introduction of the surcharge was not unexpected, having already been included in the Conservative Party manifesto (albeit at a proposed rate of up to 3% at that time). The government expects initially to increase the tax take by £250m for 2020/21 as buyers complete their purchases before the introduction of the surcharge, but does not then expect to raise any additional tax until 2023/24.