Update on the taxation of UK land

09 June 2020

SDLT surcharge for non-UK residents

In the 2020 Budget the Chancellor announced that a 2% Stamp Duty Land Tax (SDLT) surcharge will be introduced from 1 April 2021 on acquisitions of residential property in England and Northern Ireland by non-UK resident buyers (such as Swiss administered Trusts and Foundations). This announcement comes off the back of a number of reforms to the taxation of residential property in recent years and increases the maximum SDLT rate for non-UK residents to 17%, although the exact rate is dependent upon the circumstances of the purchase.

Transitional rules may apply, subject to conditions, where contracts exchanged before 11 March 2020 are completed or substantially performed after 1 April 2021.  

Please get in touch if you have any questions about how this surcharge may apply to you.

Disposals of UK land interests

Another significant change to the taxation of land in the UK in recent years is the introduction of the Non-Resident Capital Gains Tax (NRCGT) charge.  By way of reminder, under the NRCGT provisions a disposal (or gift) of an interest in UK land (including shares in a property rich company) will need to be reported to HMRC within 30 days of completion. The tax payable may also need to be paid within the 30 day time limit.  These rules have been extended to include indirect interests in UK land including where it is held via a company.  HMRC has not offered to relax these rules despite the current circumstances (although a concession has been made for UK residents disposing of UK residential property – HMRC have said that penalties will not be applied for a failure to report within the 30 day window until after July 2020). 

There are very few exemptions from the need to report the transaction, even where the result is a capital loss or the gain is covered by reliefs. Penalties will apply if the deadline is not met.

Please contact us if you plan to sell or gift any direct or indirect interest in land in the UK. We can then consider if a return will be required and what details are likely to be needed to complete the return. In relation to gifts, consideration will be needed in respect of obtaining a market valuation of the property prior to any transfer.