Opinion Former Article

New SDLT rate adds to complexity of residential property taxation

The Chartered Institute of Taxation (CIOT) is warning that a new Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland will add further complexity to an already highly complicated SDLT regime which applies to purchases of residential property.

Draft legislation published today confirms that – as originally announced at Budget 2018 – an SDLT surcharge will be introduced for non-UK residents purchasing residential property in England and Northern Ireland. The surcharge adds an extra 2% to the rate of SDLT that would otherwise have applied. It takes effect from 1 April 2021. Individuals will be non-UK resident for SDLT purposes if they spent fewer than 183 days in the UK in the 12 months ending with the date of purchase.   Individuals will be eligible for a refund if they spend 183 days in the UK over any 365-day period, beginning 12 months before the transaction and ending 12 months after.

The government’s aim is to help make house prices more affordable.

Marc Selby, Chair of the CIOT’s Property Taxes Committee said:

“SDLT has become a highly complex tax that has been the subject of technical change in virtually every year since it was introduced.

“The 3% surcharge on buyers of second properties introduced in 2016 and first-time buyers’ relief in 2018 compounded that complexity by requiring that, in the context of a transaction tax, decisions need to be made about the intended future use of the property being acquired. The new surcharge means the residence status of the buyer now may also need to be determined, often by conveyancers acting in short time scales to complete an SDLT return. Individual circumstances are sometimes complex and do not lend themselves to easy categorisation. 

“Although the Government say the rules for the new surcharge rate have been designed to be as simple as possible for taxpayers, with a new SDLT test for individual residence, the fact remains that it adds to the complexity of tax on residential property. Just as with the 3% second home surcharge, the definition of which taxpayers are affected goes wider than the real target group - for example catching UK expatriates working abroad for periods as short as a few months and buying somewhere to live on their return. Trying to put this right means some will need to pay initially and then claim a refund. This will impose administrative burdens and costs on taxpayers who need to claim them and on HMRC to administer them.

“It is also uncertain who the ultimate gainers and losers are of a change of this kind. The higher rates of SDLT for purchases of additional residential property and first time buyers’ relief in 2017 were also part of the government’s policy of supporting home ownership. However, a 2011 UK government study found that a previous cut to help first-time buyers was mostly absorbed in a higher house price, benefiting sellers rather than purchasers.”

Marc Selby added:

“Guidance will be needed on the type of evidence required by HMRC to establish residence, both for the day counting test and for refund eligibility, such as flight details, boarding passes. The guidance will need to be published well in advance of the surcharge coming into effect given that the test applies to the 12 months prior to the effective date of the transaction.

“The draft rules for determining the residence status of companies are particularly complex, since a company resident in the UK for corporation tax can be deemed to be non-resident for the purpose of the surcharge. In such cases it will be necessary to establish whether the company is “close” and, if so, whether it is “controlled” by non-UK residents. These are concepts with which conveyancers are normally unfamiliar and where specialist tax advice will often be required.

Since both the resumption of the residential rates which applied before the Chancellor’s announcement on 8 July 2020 and the non-resident surcharge will apply with effect from 1 April 2021, property lawyers can expect to be working overtime to ensure that transactions are completed before that date.”

Notes for editors


1. Draft legislation and further information on it can be found here: New rates of Stamp Duty Land Tax for non-UK residents from 1 April 2021


2.  The Chartered Institute of Taxation (CIOT)


The CIOT is the leading professional body in the United Kingdom concerned solely with taxation. The CIOT is an educational charity, promoting education and study of the administration and practice of taxation. One of our key aims is to work for a better, more efficient, tax system for all affected by it – taxpayers, their advisers and the authorities. The CIOT’s work covers all aspects of taxation, including direct and indirect taxes and duties. Through our Low Incomes Tax Reform Group (LITRG), the CIOT has a particular focus on improving the tax system, including tax credits and benefits, for the unrepresented taxpayer.


The CIOT draws on our members’ experience in private practice, commerce and industry, government and academia to improve tax administration and propose and explain how tax policy objectives can most effectively be achieved. We also link to, and draw on, similar leading professional tax bodies in other countries. The CIOT’s comments and recommendations on tax issues are made in line with our charitable objectives: we are politically neutral in our work.


The CIOT’s 19,000 members have the practising title of ‘Chartered Tax Adviser’ and the designatory letters ‘CTA’, to represent the leading tax qualification.

Contact: Chris Young, External Relations Manager, 07900 241 584 cyoung@ciot.org.uk

Out of hours contact George Crozier 07740 477374 gcrozier@ciot.org.uk

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