HMRC have just published their Stamp Taxes news for October. This is our enhanced and extended version.
COVID-19 measures
1. Temporary reduction in Stamp Duty Land Tax (SDLT) rates
The nil rate band threshold for SDLT on residential property in England and Northern Ireland is £125,000.
- Since 1 April 2016 SDLT has been charged at a higher rate on the purchase of:
- An additional dwelling by an individual.
- A dwelling purchased by a company.
- The higher rate is a 3% surcharge payable on dwellings that cost £125,000 or higher.
Between 8 July 2020 and 31 March 2021 a temporary reduced rate applies due to the Coronavirus pandemic.
- The residential SDLT threshold of £125,000 will rise to £500,000.
- The residential property higher rate of SDLT is reduced to 3% for buyers of second properties costing up between £125,001 and £500,000.
See Summer Economic Update 2020: Temporary SDLT reduction and Stamp Duty Land Tax: Rates and Reliefs
2. Higher rate SDLT and exceptional circumstances
If a new dwelling is intended to replace a main residence which has not yet been sold, the higher rates still apply.
The SDLT surcharge will be refunded if the former main residence is sold within 36 months or a longer period if there are exceptional circumstances.
- You may still be able to apply for a refund of the higher rate charge, if you purchased your new home on or after 1 January 2017 and were unable to sell your previous home within three years.
- To be able to get the refund, the delay in selling must be because of reasons outside of your control. These may be, but are not limited to:
- The impact of Coronavirus (COVID-19) preventing the sale.
- An action taken by a public authority preventing the sale.
See SDLT: Residential property higher rates
New SDLTs
Additional SDLT 2% Charge for Non-UK Residents
From 1 April 2021, it is proposed that there will be a 2% surcharge the rate of SDLT paid by non-UK residents purchasing residential property in England and Northern Ireland.
There are some useful exceptions:
- Individual purchasers may be able to claim a refund of the surcharge if they meet UK residency requirements within a 12-month period after the effective date of transaction.
- Crown employees and/or their spouse or civil partner will be able to claim an up-front relief from the surcharge.
See Non-residents SDLT Surcharge proposals
SDLT new relief from the higher rates
From 11 March 2020 it is proposed:
- Relief from the 15% rate of SDLT for interests in UK residential property costing £500,000 or more by a housing co-operative.
- There is also relief from the ATED charge on the same properties.
- Draft legislation Finance Bill 2021
Amendments to SDLT returns; common errors
Rather worryingly, HMRC says it receives "a large number of requests from agents, following the submission of a return, for some of the most important aspects to be amended".
HMRC recommends that if the error on the return changes the underlying identity of the purchaser or the property, or that effectively needs to be changed so that it is after the date of notification you must:
- Submit a new SDLT return with the correct information. The best way to do this is by filing online.
- Write to the SDLT office giving the reasons for the new return and the UTRN of both the correct and incorrect returns.
By way of an editorial note, we say 'rather worryingly' at the start of this piece as it seems odd if any UK or EU agents do not know the identity of a purchaser, as normally they are charging their client a fee and so must have some details on file, with a contract or letter of engagement. Any estate or legal agent should have already completed their Anti-Money Laundering risk assessment of their client and should be capable of returning the correct identity of the purchaser for the purposes of the SDLT return.
Stamp Taxes: Shares
What is a body corporate for group relief?
- HMRC provides a list of foreign entities which are regarded as bodies corporate for the purposes of Stamp Duty group relief in its manual STSM042260.
We note, that curiously, this list does not appear to align to the list of opaque entities provided in HMRC’s international manual INTM180030.
Capital Gains Tax (CGT) notes on conveyancing (for clients' attention)
The person who is engaged to do your legal conveyancing may file your SDLT return, do not assume that they will assist you in Capital Gains Tax (CGT) reporting or advise you on CGT or any other tax matter. Your accountant or tax adviser will normally be the one who has access to the data on CGT.
Reporting & CGT payment for property disposal
From 6 April 2020, the deadlines for both filing and paying Capital Gains Tax (CGT) on the disposal of UK property change.
There are different rules for UK residents and for non-UK residents.
- UK residents must report capital gains made on the disposal of residential property, unless the disposal is covered by Private Residence Relief (PRR), within 30 days of disposal.
- Non-UK residents report a disposal of both UK residential and non-residential property within 30 days, regardless of whether there is a gain or not.
- CGT for both categories of taxpayer is due within 30 days of the disposal.
- Non-UK residents are no longer able to defer any payment due to the Self Assessment Tax Return.
A new online service allowing UK and Non-UK residents to report and pay any CGT liability following the disposal of a UK property as defined above became available from 6 April 2020.
Amending 30-day CGT returns
- The Institute of Chartered Accountants in England and Wales (ICEAW) report that HMRC has this week introduced functionality which allows the new returns to be amended.
- Before this functionality was released, returns could only be amended by phoning or writing to HMRC.
- The ICAEW also say that executors and personal representatives are still facing difficulties in reporting CGT online, as they are currently unable to appoint agents or to view a return, make amendments or obtain payment details online, instead they need to phone HMRC for assistance.
CGT new reporting: Late filing and payment penalties
Late filing penalties now apply to those who fail to notify HMRC about a disposal or pay the tax due within 30 days from the date of completion.
- For disposals of UK residential property between 6 April and 30 June 2020, there will be no late filing penalty, provided the return and payment due, was made by 31 July 2020.
- For any transactions completed from 1 July 2020, late filing penalties will apply if the details of the gain and payment is not made within 30 calendar days from completion.
- See Late Filing Penalties and How to appeal a tax penalty.
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