HMRC have just published their Stamp Taxes news for January 2021. This is our enhanced version.

EU Exit

The UK’s exit from the EU took place on 31 January 2020. Article 126 of the Withdrawal Agreement provided for a ‘transition period’ which ended on 31 December 2020.

The Stamp Duty Reserve Tax (SDRT) 1.5% charge on issues (or transfers integral to capital raising) remains disapplied under the terms of the European Union (Withdrawal) Act 2018 following the end of the transition period. This will remain the position unless stamp taxes on shares legislation is amended. This is because the direct effect of the relevant provisions of the EU Capital Duties Directive was confirmed by the First Tier Tribunal in the HSBC and Bank of New York Mellon case before Exit Day. Relevant HMRC guidance on the 1.5% charge has been updated.


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.
  • HMRC 'would like to remind solicitors and land conveyancers that the rates will be 2% higher than other residential rates'. 
  • The charge introduces new SDLT residence tests. These are not the same as the Statutory Residence Test for individuals.
  • Individual purchasers may be able to claim a refund of the surcharge if they meet residency requirements within a 12-month period after the effective date of transaction. Crown employees and their spouse or civil partner will be able to claim an up-front relief from the surcharge.

To facilitate these new rates, the SDLT paper return and online portal will be updated to include new questions relating to:

  • The purchaser’s residence status.
  • Whether companies are under the control of non-resident persons.
  • Whether the purchaser wishes to claim crown employment relief.

A new paper return will be available to order soon and will be mandatory for all transactions with an effective date of 1 April 2021 or later. For transactions which take place before 1 April 2021, the current paper return will be mandatory until 31 March 2021 and will be accepted until 30 April 2021, after which all transactions must use the updated return.

  • HMRC say that they will be producing detailed guidance in due course: after Parliament approves the new charge

See Non-residents SDLT Surcharge proposals


End to agent’s DX number and exchange

  • With the introduction of the new SDLT return for transactions with an effective date on or after 1 April 2021, HMRC have taken the decision to phase out the use of Document Exchange (DX). For transactions using the updated return, a postal address will now be required.

HMRC's cases

First Tier Tribunal decisions do not set precedents in law, however, they may be very useful in interpreting the law. HMRC tends not to appeal cases that it does not wish to lose. In this time's Stamp Duty news it cites the following cases.

Cases that set no legal precedent that HMRC wishes to rely on:

In Noaref & Mozhdeh v HMRC [2020] TC7873, the First Tier Tribunal (FTT) dismissed a claim for the Replacement Dwelling Exemption which would have granted a refund of the higher rate of Stamp Duty Land Tax (SDLT) on the purchase of a property replacing their old main residence.

In Waterside Escapes Ltd v HMRC [2020] TC7881, Stamp Duty Land Tax (SDLT) relief was clawed back on the purchase of a high-value residential property from a partnership due to occupation by a director. The determination of attribution for the control tests for the sum of the lower proportions calculation proved a challenge.

Cases that set no legal precedent that HMRC does not wish to rely on

In Heacham Holidays Limited v HMRC [2020] TC07883the First Tier Tribunal (FTT) upheld fixed penalties imposed by HMRC for the late-filing of the taxpayer's Annual Tax on Enveloped Dwellings (ATED) return but discharged the daily penalties imposed as they were issued retrospectively without notice.

Cases which do set a legal precedent and this now becomes law

In Hopscotch Limited v HMRC [2020] UKUT 0294the Upper Tribunal (UT) upheld a First Tier Tribunal (FTT) decision that the taxpayer was subject to the Annual Tax on Enveloped Dwellings (ATED). The redevelopment of the property did not constitute a trade and so relief from the charge was not available.


Our Useful guides to Stamp Duty Land Tax

Visit our Land and Property section


External link

HMRC Stamp Taxes Newsletter January 2021


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