Changes to SDLT1 form: non-resident surcharge
On 6 January, the UK government published the Stamp Duty Land Tax (Administration) (Amendment) Regulations 2021.
The legislation updates the SDLT1 form, introducing a 2% non-resident stamp duty land tax (SDLT) surcharge that applies to purchases of residential property by non-UK residents.
The changes came into force from 1 April 2021.
The regulations include new questions on the SDLT1 form in connection with the introduction of the surcharge on non-UK residents buying residential property in England and Northern Ireland.
The regulations also remove question 64 (agent’s DX number and exchange).
Buyers are now asked whether they are non-resident or a UK-resident close company controlled by non-residents, and if they are claiming Crown Employment Relief.
HM Revenue and Customs (HMRC) says that where the effective date of the transaction is before 1 April 2021, the buyer can use either the new form or the previous version, provided the form is delivered before 1 May 2021.
We responded to HMRC’s consultation on the updated form in November 2020. One of the points we made in our response was that HMRC should update its guidance to support conveyancing practitioners in navigating the new questions in the form.
HMRC has now published updated guidance on how to complete the SDLT1 form.
In answering new questions on the form, specific new SDLT residence tests will need to be applied depending on who the buyer is (for example, an individual, a joint buyer, a company, a partnership, a trust and so on).
What this means for solicitors
From 1 April 2021, the introduction of the non-UK resident surcharge and related changes to the SDLT1 return form mean that, for the first time, solicitors and others in the home-buying process have to consider the concept of residence.
Solicitors will need to obtain more information when filling out an SDLT1 return form.