VQOTW: SDLT changes from April 2021

My clients are a non-resident married couple who have a portfolio of UK residential properties in both sole and joint ownership. As part of an Inheritance Tax planning exercise, the husband is considering the transfer of some of his properties to his wife and this will include a transfer of debt which we understand is treated as “consideration” for SDLT purposes.

Can you please explain the consequences for Stamp Duty Land Tax of transfers being done both before and after the end of the current SDLT “holiday”, both in terms of the additional 3% “higher-rate for additional dwellings” and the proposed additional 2% for acquisitions by non-residents after 31 March 2021? We expect the debt to be transferred to his wife to be below the £500,000 threshold available under the temporary SDLT “holiday”.

The end of the current SDLT holiday and the introduction of the non-residents surcharge for residential property are both due to take effect from 31 March 2021. Please bear in mind that the latter provisions are currently in draft legislation form: with an imminent Budget, significant changes could be made before implementation. The draft legislation can be accessed via this link –


The proposed non-resident surcharge will apply to residential acquisitions only and is independent of the current 3% higher-rate for additional dwellings (HRAD). It is therefore possible for one, both, or neither of them to apply in a particular case:  each provision must be considered separately in arriving at the correct tax payable for transactions taking place after 31 March.

The new non-residents 2% SDLT surcharge for UK residential properties

Where applicable, this will simply add a further 2% to the SDLT calculated in each band of consideration.  It is important to note the simplified and self-contained definition of “non-resident” for this purpose: the “statutory residence test” for income and capital gains has no relevance in this context and it is therefore possible to have a different residence status under each set of rules.

The new SDLT meaning of “non-UK resident”

The draft legislation defines a non-resident for this purpose as someone who, by default “is not UK resident”. An individual is regarded as  “UK resident” if they are present in the UK for at least 183 days over a 2 year “relevant period” which begins 364 days before the date of the transaction and ends 365 days after it.   A person is treated as present in the UK on a day if they are located here at the end of that day (paras 3 and 4 of the draft legislation).

The SDLT Holiday and the 3% higher-rate for additional dwellings (HRAD).

The current SDLT “holiday”, introduced 8 July 2020 and due to end on 31 March 2021, temporarily increases the initial rate band to £500,000.  This gives an effective SDLT rate of either 0% or 3% on the consideration within this band, with the 3% rate if the transaction is subject to the additional 3% for additional dwellings/acquisitions by companies etc. (HRAD, Sch. 4ZA, FA 2003).

However, in the context of your client’s proposed transactions, note that there is a specific disapplication of the additional 3% rate for spouses living-together at the date of transaction as follows (s.9A, Sch. 4ZA, FA2003):

9A(1)  A chargeable transaction is not a higher rates transaction for the purposes of paragraph 1 if–

(a) there is only one purchaser,

(b) there is only one vendor, and

(c) on the effective date of the transaction the two of them are–

(i) married to, or civil partners of, each other, and

(ii) living together

Therefore, no SDLT will be payable by your clients if the consideration does not exceed £500,000 and the transactions take place by 31 March.

If we assume a consideration of, say, £400,000, and that your clients are indeed “non-resident” for this purpose, the “before and after” positions are in quite stark contrast as follows:

Before 01/04/21: SDLT £400,000 @ 0% NIL SDLT due
After 01/04/2021: £
First £125,000 @ 0% 0
Next £125,000 @ 2% 2,500
Balance of £150,000 @ 5% 7,500
Plus – non-residents surcharge: £400,000 @2% 8,000
Total SDLT due  18,000


If your client were transferring an interest in two or more separate dwellings, then an alternative calculation could be performed claiming “multiple dwellings relief” which allows the SDLT to be calculated based on the average, rather than combined consideration (Sch. 6B, FA 2003). For example, if two dwellings were being transferred between them after 31 March in the above example, the calculation on this basis would be as follows:

£400,000/2 = £200,000 consideration for each dwelling:

First £125,000 @ 0% 0
Balance of £75,000 @ 2% 1,500
Plus – non-residents surcharge @2%  4,000 
SDLT due (on each property)  5,500
Total SDLT due with MDR: 2 x £5,000= 11,000


This represents a saving of £7,000 with MDR, compared with the default calculation above. The amount of saving would of course, depend on the number of individual dwellings being transferred.

Your clients will therefore be able to enjoy significant savings, in view the proposed SDLT changes, if they complete their property transfers before 31 March and consideration is given to the availability of multiple dwellings relief.

Please share this article with your clients

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Tax Advice Consultant
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Roger spent 14 years with the Inland Revenue followed by several years working in the tax department of an accountancy practice. Roger is a member of the Association of Taxation Technicians and, as well as advising on all areas of direct tax, he specialises in Stamp Duty Land Tax.

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