The Chancellor’s Budget Statement presented on 11th March 2020 included a number of proposals potentially affecting property transactions which are summarised below:
Stamp duty land tax (SDLT)
Following rumours that there would be widespread changes to SDLT, only one proposal was announced. This is for a non UK resident SDLT surcharge of 2%, in addition to the SDLT charge which would otherwise be payable, for non UK resident purchasers of residential property in cases where the transaction is completed or substantially performed on or after 1st April 2021. Accordingly:
The charge should not apply for transactions completed before the above date
Transitional relief is likely to apply for transactions completed on or after 1st April 2021, provided that contracts were exchanged before 11th March 2020 and the contract is not assigned or varied, and the transaction is not completed pursuant to an option exercised, on or after 11th March 2020
As always, the devil will be in the detail and it will be necessary to identify who will be “non resident” for the purpose of the surcharge the draft legislation for which is expected to be in the 2020/21 Finance Bill. Detailed proposals for a non resident surcharge were contained in a consultation document published in October 2018 which included a proposal for a residency test specifically for the surcharge, under which it would be possible for an individual to be resident in the UK for income tax and CGT under the (complex) statutory residence tests, but “non resident” for the purpose of the surcharge. The proposals also stated that a corporate purchaser would be treated as “non resident” for the purpose of the surcharge if controlled by non residents, even if the corporate entity was UK resident for corporation tax.
Annual tax on enveloped dwellings (ATED) and the 15% “flat” rate of SDLT New relief for housing cooperatives
The government is to introduce new reliefs from ATED and the 15% rate of SDLT for housing cooperatives and will consult on draft legislation with a view to introducing relevant changes in the 2020/21 Finance Bill.
ATED: annual chargeable amounts
The government has announced increases in the annual chargeable amounts for ATED for the 20/21 tax year, the rates for the current year and the proposed new rates for 20/21 are as follows:
Structures and building allowance
This is a valuable relief which can apply for businesses that incur qualifying expenditure on the construction, renovation or conversion of non residential structures and buildings. The objective of the allowance is to relieve the construction, renovation or conversion costs for new structures and buildings used for qualifying purposes over their lifetime. Currently the annual allowance which can be claimed for such expenditure is at the rate of 2%, but this is to be increased to 3% from 1st April 2020 for corporation tax and 6th April 2020 for income tax.
