Policy paper

Homes for Ukraine: Reliefs and exemptions from Stamp Duty Land Tax and the Annual Tax on Enveloped Dwellings

Published 15 March 2023

Who is likely to be affected

Companies, partnerships with corporate members, and collective investment schemes (collectively referred to as non-natural persons (NNPs)), which purchase and own UK residential property valued in excess of £500,000 and who temporarily accommodate those fleeing the conflict in Ukraine.

Local Authorities (LAs) purchasing social housing to accommodate people fleeing conflict.

General description of the measure

This measure introduces new and temporary reliefs from the Annual Tax on Enveloped Dwellings (ATED) and the 15% rate of Stamp Duty Land Tax (SDLT) where a NNP makes a dwelling available to Ukrainian refugees under the Homes for Ukraine Sponsorship Scheme (‘the Sponsorship Scheme’). It also makes a change to the SDLT ‘registered social landlord’ exemption to ensure that LAs granted additional funding to acquire housing to accommodate those fleeing conflict (including in Ukraine and Afghanistan), benefit from this SDLT exemption.

Policy objective

This measure will ensure that those wishing to offer accommodation to Ukrainian refugees fleeing the war do not face any unfair obstacles or immediate tax burdens in the form of ATED and 15% rate of SDLT. It also ensures that all LAs in receipt of new funding from the Department for Levelling Up, Housing and Communities (DLUHC) to be used to purchase housing to accommodate those fleeing conflict, qualify for the SDLT ‘registered social landlord’ exemption.

Background to the measure

ATED and the 15% rate of SDLT are charged on NNPs which purchase and own an interest in UK residential property. The 15% rate of SDLT is charged on the acquisition of residential property located in England and Northern Ireland by such entities where the purchase price paid is more than £500,000. ATED is charged annually on the ownership of UK residential property valued in excess of £500,000 held by such entities.   

Both taxes include a number of reliefs and exemptions aimed at certain types of use of the property (for example, in a property rental business).   

On 13 March 2022 the government announced a humanitarian sponsorship scheme for those fleeing the war in Ukraine, allowing individuals, charities, community groups and businesses in the UK to sponsor Ukrainians arriving in the UK.

The government announced in a Written Ministerial Statement on 31 March 2022 that it would introduce legislation in Finance Bill to ensure that -

• relief from ATED and the 15% rate of SDLT will not be lost for those NNPs which make a dwelling available for occupation by refugees under the Sponsorship Scheme;
• where a dwelling does not currently qualify for any relief from ATED, relief will be available from the point of actual occupation of the dwelling by refugees under the Sponsorship Scheme;
• a dwelling purchased for a purpose which would otherwise be a relievable purpose will qualify for relief from the 15% rate of SDLT where it is intended that the dwelling is temporarily made available to refugees under the Sponsorship Scheme.

The Statement also made clear that the Commissioners of HMRC will not collect any tax that would otherwise be due pending enactment of retrospective legislation.

On 14 December 2022, DLUHC announced an additional £650 million ‘Homes for Ukraine’ support package. This included giving Councils in England an additional £500m to reduce homelessness by obtaining housing for those fleeing conflict. This additional funding is allocated under section 31 of the Local Government Act 2003 (LGA 2003).

Purchases of property by registered providers of social housing are exempt from SDLT, provided that the purchase is funded with the assistance of a specified public subsidy. As the legislation stands, not all LAs in receipt of the additional funding would qualify for the exemption from SDLT.

Detailed proposal

Operative date

The change to ATED came into effect from 1 April 2022.

For the 15% rate of SDLT, the measure applies for transactions with an effective date on or after 31 March 2022, which was the date of the Written Ministerial Statement.

For the SDLT registered social landlord exemption, the measure will come into effect for transactions with an effective date on or after 15 March 2023.

Current law

Sections 132 to 150 of Finance Act 2013 (FA 2013) make provision for reliefs from ATED.  

Similarly paragraphs 5 to 5K Schedule 4A to Finance Act 2003 (FA 2003) make provision for reliefs from 15% SDLT and for withdrawal of the relief in certain circumstances.

Section 71 of Finance Act 2003 provides for an exemption from SDLT for registered social landlords purchasing social housing with the assistance of a public subsidy. A public subsidy is defined as one of those listed in section 71(4).

Proposed revisions

Legislation is introduced in Spring Finance Bill 2023 to amend FA 2003 and FA 2013 introducing new and temporary reliefs from both ATED and the 15% rate of SDLT for dwellings made available to Ukrainian refugees under the Sponsorship Scheme.

New section 133A is inserted into FA 2013 to treat an NNP which makes a dwelling available to a Ukrainian refugee under the Sponsorship Scheme, and which would otherwise be relieved from ATED on the basis that it is running a property rental business, as if it were continuing to do so. This section also provides that an NNP previously chargeable to ATED can claim relief from the charge on the days on which the property is actually occupied by a Ukrainian refugee under the Sponsorship Scheme as if it were running a property rental business.

Section 138 (property developer relief) and section 141 (property traders relief) of FA 2013 is amended to similarly ensure that entitlement to these reliefs is not lost.

New subparagraph (2A) is inserted into paragraph 5 of Schedule 4A to FA2003 and provides that in determining whether a chargeable interest has been acquired exclusively for one or more of the existing relievable purposes, any intention to temporarily make the property available to a refugee under the Sponsorship Scheme is to be ignored.

Paragraph 5G(4) of Schedule 4A to FA 2003 is amended to provide that relief given under paragraph 5 will not be withdrawn where the dwelling is temporarily made available to a refugee under the Sponsorship Scheme.

A regulatory making power is inserted into Finance Bill 2023 enabling the government to end the reliefs from ATED and the 15% rate of SDLT on a date specified in Treasury regulations.

Section 71(4) of FA 2003 is amended to ensure that registered providers of social housing purchasing property with the assistance of the section 31 LGA 2003 funding qualify for the registered social landlord exemption.

Summary of impacts

Exchequer impact (£m)

2022 to 2023	2022 to 2023	2024 to 2025	2025 to 2026	2026 to 2027	2027 to 2028
nil	-15	nil	nil	nil	nil

These figures are set out in Table 4.1 of Spring Budget 2023 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2023.

Economic impact

This measure is not expected to have any significant macroeconomic impacts.

Impact on individuals, households and families

Collectively, these measures are expected to have positive indirect impact on individuals fleeing conflict as it will facilitate the provision of accommodation for refugees.

The reliefs from ATED and the 15% rate of SDLT are not expected to have any direct impact on individuals as they apply to companies, partnerships with company members, and collective investment schemes. These temporary reliefs are not expected to impact on family formation, stability or breakdown.

Equalities impacts

It is not expected that there will be adverse effects on any group sharing protected characteristics.

Impact on business including civil society organisations

The temporary reliefs from ATED and the 15% rate of SDLT are expected to have a positive impact on a small number of businesses which make a dwelling available to Ukrainian refugees under the Sponsorship scheme who would have lost eligibility to a relief from these charges.

The change to the registered social landlord exemption is expected to have a positive impact on approximately 90 Local Authorities as it will allow them to benefit from an exemption from SDLT when purchasing social housing with the assistance of the section 31 LGA 2003 funding.

One-off costs would include familiarisation with the new rules. There are no expected continuing costs.

Customer experience is expected to remain broadly the same as it is now because the measure does not change how customers interact with HMRC.

This measure is not expected to impact civil society organisations.

Operational impact (£m) (HMRC or other)

There are no operational impacts associated with these changes.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

This measure will be kept under review through regular communication with DLUHC, customer engagement and from information collected in returns.

Further advice

If you have any questions about this change, please contact stamptaxes.budgetfinancebill@hmrc.gov.uk

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