Do You Know About This Additional 2% SDLT Surcharge in England as from 1st April 2021?

Do You Know About This Additional 2% SDLT Surcharge in England as from

1^st April 2021?

Not applicable in Scotland

By Gordon Campbell

22^nd March 2021

What is the SDLT surcharge?

As from 1st April 2021, a 2% surcharge on Stamp Duty Land Tax (SDLT) will be imposed upon non-UK resident buyers of residential properties in England and Northern Ireland.

The additional surcharge does not apply to Scotland.

What does the Stamp Duty Land Tax (SDLT) surcharge mean?

From 1 April 2021, any purchase of a residential property in England and Northern Ireland (the surcharge does not apply to properties in Scotland and Wales) by a non-UK resident will incur a further 2% on the standard rate of SDLT.

As in most cases, the purchase will be a second home or buy to let investment, meaning this new surcharge will be in addition to the 3% surcharge already on second home and investment purchases.

So who does this apply to? 

The extra surcharge applies to all non-UK residents, including individuals with fewer than 183 days residency in the UK and companies and trusts registered outside the UK.

Tax paying residents of the UK will not have to pay the surcharge although it may affect UK companies owned by non-UK residents.

Why does this not effect Scotland?

The reason is that even although Scotland is part of the United Kingdom, there is some devolved powers that the Scottish Government have full control on, e.g. housing- so as in this case they can decide not to implement the tax.

This is the blog we did recently, What is The Difference In The Property Market Between Scotland and England? (click link to open), that explained the positive difference in the Scottish property market.

Will Scotland bring in the new 2% surcharge? 

There is no indication that it will happen.

What is the benefit to me?

• The forthcoming additional tax does not affect Scotland

• The majority of properties Alliance Property Group sell are below £40,000 so below the Stamp Duty threshold so there is no tax what so ever to be paid.

• The many other benefits of the properties we sell e.g. off market, below market value, good properties, good areas, good demand, highlighted in the recent blog A New Exciting Investment Opportunity for You (click link to open)

Example

When a overseas buyer purchases a second home in England for £150,000.

The current SDLT would be: –

• 3% on the first £125,000 = £3,750
• 5% on the next £25,000 =  £1250
• Total SDLT = £5,000
  
  

As from 1 April 2021 using the same scenario the SDLT will be: –

• 5% on the first £125,000 = £6,250
• 7% on the next £25,000 =  £1,750
• Total SDLT = £8,000

An increase of      £3,000

For anything else property related, we are happy to help in any way we can with your portfolio and tap into our 38 years’ experience and  knowledge for impartial advise.

And as always, we are here for you.

Alliance Property Group. Making A Difference.