Guidance

Stamp taxes newsletter: April 2021

Updated 24 February 2023

Stamp Duty Land Tax (SDLT) Upper Tribunal Decision: Hyman et al

On 18 March 2021, the first Upper Tribunal decision was released about what constitutes the garden or grounds of a dwelling. This was to help decide if the SDLT charge should be based on either:

• higher residential rates
• lower non-residential
• mixed residential and non-residential rates

On 3 March 2021, the amalgamated taxpayer appeals of 3 first-tier decisions, made by Hyman, Goodfellow and Pensfold, were heard by way of a remote hearing.

The issue considered was a narrow question of law: if the meaning of ‘the garden or grounds’ in section 116(1)(b) of the Finance Act 2003, was limited to that needed for the reasonable enjoyment of the dwelling, having regard to the dwelling’s size and nature.

The Tribunal agreed with HMRC that there was no such limit, in line with the SDLT Manual (SDLTM00480).

Additional 2% Stamp Duty Land Tax charge for non-UK residents

This is a reminder that as of 1 April 2021, new rates of SDLT apply for non-UK residents purchasing residential property in England and Northern Ireland.

These rates are 2% higher and apply on top of the existing residential rates to non-UK residents, be they either:

• individuals
• trusts
• partnerships
• companies (including certain UK resident companies controlled by non-UK resident persons)

Specific SDLT residence tests apply when determining whether a purchaser is a non-UK resident.

These rates apply to purchases of freehold and leasehold residential property, including to the rental element of leasehold property.

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, or their spouse or civil partner, may be able to claim an up-front relief from the surcharge.

Guidance

Find out more about rates of SDLT for non-UK residents and the SDLT residency tests.

Find out about the interaction between the non-resident rates and the temporary reduced rates of SDLT.

Detailed guidance can be found in the SDLT Manual, beginning at section SDLTM09850.

Use the updated SDLT online calculator to calculate the SDLT due on the purchase of a residential property by a non-UK resident.

SDLT Returns

The updated SDLT paper return and online portal answer questions about residency, accounting for the new rates applicable to non-UK residents.

When filling out the SDLT return, an Agent’s DX number and exchange is no longer required. This means box 64 is no longer in use.

It’s best to file your SDLT return online. If you are unable to do this, a new paper return is available to order from HMRC. It must be used for any purchase with an effective date of transaction on or after 1 April 2021. Failure to do this will result in your paper return being rejected. You will be notified if this happens.

Find out more about filing SDLT returns.

Extension of the SDLT holiday

The temporary increase in the nil rate band for residential purchases in England and Northern Ireland has been extended.

The £500,000 nil rate band will be in place up to and including 30 June 2021 (rather than ending on 31 March 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.

The SDLT online calculator has been updated for the new rates of SDLT.

Find more information about the temporary reduced rates.

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 3 years, or up until a 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.

Find more information about the relief in the tax information and impact note.

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.

Guidance

Find out more about the SDLT relief in the SDLT Manual at section SDLTM09500.

Find out more about the ATED relief in the ATED technical guidance(from paragraph 41.8) and the ATED returns notice.

ATED: 2021 to 2022 annual chargeable amounts

On 1 April 2021, ATED charges will increase by inflation for the 2021 to 2022 chargeable period.

Taxable value of the property	Charges for 2020 to 2021	Charges for 2021 to 2022
£500,001 to £1,000,000	£3,700	£3,700
£1,000,001 to £2,000,000	£7,500	£7,500
£2,000,001 to £5,000,000	£25,200	£25,300
£5,000,001 to £10,000,000	£58,850	£59,100
£10,000,001 to £20,000,000	£118,050	£118,600
£20,000,001 and over	£236,250	£237,400