Stamp Taxes Newsletter April 2021

HMRC have published their Stamp Taxes news for April 2021. This is our enhanced version with links to our guides and SDLT tools.

Additional 2% SDLT charge for non-UK residents

From 1 April 2021, a new 2% surcharge is added to the standard rates of SDLT for non-UK residents purchasing residential property in England and Northern Ireland. 

• These rates apply to purchases of freehold and leasehold residential property, including to the rental element of leasehold property.
• The surcharge applies to non-UK residents including individuals, trusts, partnerships and companies.
• Specific SDLT residence tests apply when determining whether a purchaser is a non-UK resident: these are based on day counting. These are different to the Statutory Residence Test.
• Refunds can be claimed if certain residency requirements are met within a 12-month period, after the effective date of the transaction. Crown employees, or their spouse or civil partner, may be able to claim an up-front relief from the surcharge.

See our guide: SDLT: Non-residents’ surcharge

• HMRC have released detailed guidance which can be found in the SDLT Manual, beginning at section SDLTM09850.
• HMRC have updated their SDLT online calculator to include purchases of a residential property by a non-UK resident.

Extension of the COVID-19 SDLT 'holiday'

• The temporary increase in the nil rate band of £500,000 for residential purchases in England and Northern Ireland has been extended until 30 June 2021.
• This will decrease to £250,000 between 1 July 2021 to 30 September 2021 (inclusive). It will return to the standard amount of £125,000 on 1 October 2021.
• First Time Buyers’ Relief (which has no effect while the nil rate band is £500,000) will resume on 1 July 2021.

See: SDLT: At a glance SDLT rates and allowances

• HMRC's SDLT online calculator has been updated for the new rates of SDLT.

Freeports

The government has introduced provisions to relieve SDLT from purchases of land in Freeport tax sites.

• This relief is subject to the land being purchased for use in a qualifying manner during a control period. The control period lasts three years, or up until disposal of the land to an unconnected party.
• Relief is available for purchases made from the time the Freeport tax site is formally designated, up to and including 30 September 2026.
• The government has also introduced provisions to extend the powers in Schedule 36 of the Financial Act 2008. This means HMRC can give a taxpayer an information notice to check the conditions for the relief are satisfied, during or throughout the control period. This change will also apply to other SDLT reliefs with a withdrawal provision and will come into effect on Royal Assent of Finance Bill 2021.

See our guide: Freeports: tax breaks

Housing co-operatives: Annual tax on enveloped dwellings (ATED) and the 15% rate of SDLT

The government has introduced new reliefs from ATED and the 15% rate of SDLT for housing co-operatives.

• For SDLT, where the effective date of the transaction is on or after 3 March 2021, the relief can be claimed for land transactions.
• For ATED, the relief will apply to chargeable periods beginning on or after 1 April 2020. This means eligible housing co-operatives, who’ve already paid ATED for that period, can claim a refund.

See our guide: Annual Tax on Enveloped Dwellings (ATED)

Recent topical SDLT cases 

In Zyrieda Denning, MH Hants Limited & MP Hants Limited v HMRC [2021] UKUT76 (LC)Zyrieda Denning, MH Hants Limited & MP Hants Limited v HMRC [2021] UKUT76 (LC), the Upper Tribunal (UT) determined that the market value of a leasehold interest, for Stamp Duty Land Tax (SDLT) in two care homes was substantially less than that calculated under the RICS principles. The RICS valuation included separate goodwill which was not chargeable to SDLT. Commentary, see our guide to Goodwill: trade related properties

In (1) David Hyman and Sally Hyman (2) Pensfold (3) Craig Goodfellow and Julie Goodfellow v HMRC [2021] UKUT0068, the Upper Tribunal considered the definition of 'residential property' determing that residential rates of Stamp Duty Land Tax should apply to land that was attached to residential properties as it represented garden or grounds of the associated dwelling.

Recent cases of interest: purchase of a house with an annex

In Andrew & Tiffany Doe v HMRC [2021] TC08003, the First Tier Tribunal (FTT) dismissed the taxpayer's appeal against an HMRC closure notice denying Multiple Dwellings Relief (MDR) on the purchase of a property with annex.  The FTT also concluded the HMRC enquiry had been raised within the required time limits.

In Edward and Clare Partridge v HMRC [2021] TC7991, the First Tier Tribunal (FTT) denied SDLT Multiple Dwellings Relief on the purchase of a house with an annexe. It was a single dwelling.

New subscriber toolkit: Multiple dwellings relief and Annexes/Cottages

• If you are buying two or more properties in a single transaction use this tool to see if you meet the qualifying conditions and you may be able to claim both Multiple Dwellings Relief and relief from the Higher Rate Charge.
• This tool is free for Subscribers to www.rossmartin.co.uk or it may be purchased separately.
• See: SDLT: MDR & Annexes Tool

More topical guides and updates

Stamp Taxes Newsletter January 2021
Last time's edition.

SDLT: Non-residents’ surcharge
Non-UK residents will be subject to an additional 2% Stamp Duty Land Tax (SDLT) surcharge on the acquisition of UK residential property from 1 April 2021.

Freeports: tax breaks
The government has provided details of new tax breaks, confirmed in the Budget 2021, for business seeking to locate and operate in a Freeport. Tax breaks cover Stamp Duty Land Tax (SDLT), Capital Allowances, National Insurance and business rates.

Annual Tax on Enveloped Dwellings (ATED)
What is ATED?  Who does ATED apply to?  What relief is available and how is it claimed?  What are the ATED return filing dates?

SDLT: At a glance SDLT rates and allowances
What is Stamp Duty Land Tax (SDLT)? What are the rates of Stamp Duty Land Tax (SDLT)?

SDLT: Multiple Dwelling Relief
What is Multiple Dwellings Relief (MDR) for Stamp Duty Land Tax purposes? When does it apply and how is it claimed?

SDLT: Multiple Dwellings Relief & Annexes Tool
Stamp Duty Land Tax (SDLT) Tool, if you are buying two or more properties in a single transaction use this tool to see if you meet the qualifying conditions and you may be able to claim both Multiple Dwellings Relief and relief from the Higher Rate Charge.

External link

HMRC Stamp Taxes Newsletter April 2021