Annual Tax on Enveloped Dwellings and the 15% rate of Stamp Duty Land Tax Relief under the Homes for Ukraine Sponsorship Scheme
Published 20 July 2022
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This publication is available at https://www.gov.uk/government/publications/homes-for-ukraine-sponsorship-scheme-tax-exemptions-and-reliefs/annual-tax-on-enveloped-dwellings-and-the-15-rate-of-stamp-duty-land-tax-relief-under-the-homes-for-ukraine-sponsorship-scheme
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.
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 non-natural person makes a dwelling available to Ukrainian refugees under the Homes for Ukraine Sponsorship Scheme (‘the Sponsorship Scheme’).
Policy objective
This measure will make sure 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.
Background to the measure
ATED and the 15% rate of SDLT are charged on non-natural persons 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 will introduce legislation in Finance Bill 2022-23 to ensure that:
- relief from ATED and the 15% rate of SDLT will not be lost for those non-natural persons 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 in Finance Act 2022-23.
Detailed proposal
Operative date
This measure will come into effect from 1 April 2022 for Annual Tax on Enveloped Dwellings.
For the 15% rate of Stamp Duty Land Tax, the measure will come into effect for transactions with an effective date on or after 31 March 2022, which was the date of the Written Ministerial Statement.
Current law
Sections 132 to 150 of Finance Act 2013 (FA 2013) make provision for reliefs from Annual Tax on Enveloped Dwellings.
Similarly Paragraphs 5 to 5K Schedule 4A to Finance Act 2003 (FA 2003) make provision for reliefs from 15% Stamp Duty Land Tax and for withdrawal of the relief in certain circumstances.
Proposed revisions
Legislation will be introduced in Finance Bill 2022-23 to amend FA 2003 and FA 2013 to introduce new and temporary reliefs from both ATED and the 15% rate of SDLT for dwellings made available to Ukrainian refugees under the Sponsorship Scheme. The draft legislation published for consultation proposes the following revisions.
New section 133A would be inserted into FA 2013 to treat an non-natural person 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 non-natural person 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 FA2013 would be amended to similarly make sure that entitlement to these reliefs are not lost.
New subparagraph (2A) would be inserted into paragraph 5 of Schedule 4A of FA2003 and provide 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 of FA 2003 would be amended and 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.
Summary of impacts
Exchequer impact (£million)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| Empty | Empty | Empty | Empty | Empty | Empty |
The final costing will be subject to scrutiny by the Office for Budget Responsibility and will be set out at the next fiscal event.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This temporary measure is not expected to have any direct impact on individuals as ATED and the 15% rate of SDLT applies to companies, partnerships with company members, and collective investment schemes. This temporary measure is not expected to impact on family formation, stability or breakdown.
However, this measure is expected to have positive indirect impact on individuals fleeing the war in Ukraine as it will facilitate the provision of accommodation for refugees.
Equalities impacts
It is not anticipated that there will be any negative impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This temporary measure is expected to have a positive impact on a small number of businesses which make a dwelling available to Ukrainian refugees under the Sponsorship scheme and would have lost eligibility to a relief from these charges.
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 non-natural persons interact with HMRC.
This temporary measure is not expected to impact civil society organisations.
Operational impact (£million) (HMRC or other)
There are no operational impacts associated with this change.
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 the Department for Levelling Up, Housing and Communities (DLUHC) and from information collected in returns.
Further advice
If you have any questions about this change, contact: stamptaxes.budgetfinancebill@hmrc.gov.uk.