Stamp Duty Land Tax (SDLT) in England is changing. Firstly, for most transactions with an effective date on or after 1 March 2019, the filing and payment window is being reduced to 14 days. Secondly, HM Revenue & Customs (HMRC) has just opened a consultation on proposals to introduce a one per cent surcharge on non-UK residents buying residential property in England1.

The time limit for filing your SDLT return and paying any tax due is changing

Under current legislation, an SDLT return must be submitted within 30 days of the effective date of the transaction. This time period is being reduced for most transactions with an effective date on or after 1 March 2019 so that returns must be submitted and any tax due paid before the end of the 14-day period after the effective date2

Failure to file returns or pay the tax due on time will result in interest charges and penalties being imposed by HMRC.

The 30-day pay and filing window will be preserved for certain specified transactions. This will generally be the case where an earlier transaction has been notifiable at a time when the 30-day window applied and a subsequent return is due. This might be, for example (but not limited to), (i) where there has been contingent, uncertain or unascertained consideration and a further return is subsequently required (ii) where an earlier notifiable transaction is followed by a linked transaction which requires a further return (iii) where a lease is "held over" and a further return is required or (iv) if in the first five years of a lease with rent that becomes certain, a further return is required. The 30-day pay and file window also continues where returns are required following the withdrawal of certain SDLT reliefs.

It is worth bearing in mind that all that is changing is the time period within which a purchaser needs to comply – the liabilities for the purchaser to submit a return and to pay the tax due will stay the same.  Furthermore these changes do not affect the time periods for filing and paying Welsh Land Transaction Tax (for Welsh transactions) or for Land and Buildings Transaction Tax (for Scottish transactions).

Consultation on non-UK residents surcharge

Following the 2018 Budget announcement, HMRC has now issued a consultation paper on the proposal to introduce a one per cent SDLT surcharge on non-UK residents purchasing residential property in England and Northern Ireland.

The government believes that by introducing this surcharge it will "help to control house price inflation, thereby assisting residents in getting onto the housing ladder".

The surcharge will apply to both individuals and non-natural persons and, as such, the bulk of the consultation focuses on the residency tests to be applied. The table below summarises some of the main tests being proposed.

Purchaser When will they be treated as non-resident for the purposes of this surcharge
Individual If they spent fewer than 183 days in the UK in the 12 months ending with the date the transaction occurs. 
NOTE: days spent anywhere in the UK (not just England) will count for this purpose.
NOTE: where an individual who has been subject to the surcharge spends 183 days or more in the UK in the 12 months following the effective date of the transaction, they will be eligible for a refund. The individual will have 24 months from the transaction to claim the refund.
Companies generally A residence test based on Chapter 3 of Part 2 of the Corporation Tax Act 2009 will be introduced. Broadly, this means that companies will be resident in the UK and therefore outside the scope of the surcharge if:
  • they are incorporated in the UK; or
  • at the time they acquire the residential property, their central management and control is exercised in the UK.
UK resident close companies There is an additional test. The surcharge may apply if, at the point it acquires residential property, it is a close company under the direct or indirect control of one or more non-UK resident persons. So you would need to establish the residence status of the participators – if the participator is an individual, the individual residence test applies; if it is a trust, the trust residency test will apply etc.
NOTE: does not apply to non-close companies or to entities treated as companies for SDLT purposes.
UK resident non-close companies Surcharge does not apply.
Entities treated as companies for SDLT purposes Unit trusts: residence will be based upon the residency principles as applied to trusts.
Contractual schemes: will be treated as non-resident if they are constituted by arrangements that create rights in the nature of co-ownership where the arrangements take effect as a result of the law of a territory outside the UK.
Partnerships The surcharge will apply if any one of the partners is a non-UK resident as defined by the relevant residency test (so, if the partner is an individual, the individual residency test; if the partner is a company, the company test).
Trusts Will vary depending on the type of trust involved and whether or not the transaction involves the grant of a lease.
For example, a bare trust, not involved in the grant of a lease, will be treated as transparent so SDLT will apply as though the acquisition were made directly by the beneficiaries for whom the trustee is buying the property. Consequently, the surcharge will apply if the beneficiary or one of the beneficiaries is a non-UK resident. 

Some of the other key points to come out of the consultation include:

  • There will be no reliefs from the surcharge for any non-UK resident non-natural persons.
  • The government is considering an upfront relief for all those non-UK residents who at the time of the transaction are Crown employees subject to UK income tax (e.g. diplomats, armed forces etc.).
  • The surcharge will apply on top of existing legislation including existing rates of SDLT. So, for example, if the acquisition is subject to the flat rate of SDLT of 15 per cent but also qualifies for the surcharge, the total SDLT rate will be 16 per cent. The consultation closes on 6 May 2019.


1. The surcharge would also apply to purchases of residential property in Northern Ireland. However this note is limited to a consideration of the changes in England.

2. Section 46 of the Finance Act 2019.

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