Non-resident SDLT: BUDGET 2020 - the Good, the Bad and the Ugly

The seemingly good news is that this applies to contracts from 1 April 2021: as stated by the Chancellor.

The bad news (apart from the fact that the charge is being introduced - at all) is that the rate will be 2% and not the 1% rate that appeared in the original consultation process.

However, the ugly is the exact implementation date.

Rishi Sunak indeed did expressly refer to 1 April 2021 and the property industry breathed a collective sigh of relief. However, much like the introduction of the higher rates for additional dwellings (HRAD) that is not the whole picture.

Page 18 of the "Overview of Tax Legislation and Rates" document fleshes out the timing of the proposal in more detail. If a contract was exchanged before 11 March 2020, then subject to the standard SDLT transitional rules (regarding no variation, sub-sale, options etc), that contract regardless of when it is completed will not be within the new NRSDLT surcharge regime. Contracts that exchange from today, if completed or substantially performed before 1 April 2021, are also outside the regime. However the surprise for those who simply heard the Chancellor's speech is that contracts which exchange from today will be subject to the NRSDLT surcharge if completion or substantial performance occurs on or after 1 April 2021.

Elizabeth and Heather are Partners in our Corporate team.