BUDGET 2024: LABOUR STRIKES CLOSER TO HOME WITH INCREASED SDLT RATE FOR ADDITIONAL PROPERTIES ETC
Andy Wood • October 31, 2024
BUDGET 2024: LABOUR STRIKES CLOSER TO HOME WITH INCREASED SDLT RATE FOR ADDITIONAL PROPERTIES ETC
Introduction
Back in the election manifestoes, Labour had promised to raise more stamp duty by adding another 1% on the rate for non-residents buying UK residential property.
The surcharge for foreigners being 2%.
This seemed perfect. A tax not only paid by ‘others’ (the best kind of tax). But it would be payable by ‘others’ located overseas.
However, it seems that Labour has eschewed such an obvious move and decided to add this to the surcharge applied to anyone purchasing an ‘additional’ property.
It is assumed this is a much more lucrative move.
SDLT – increase in the additional surcharge etc
As per the Budget announcement, this increased rate, raised from 3% to 5% above the standard residential rates, will be paid by those who have more than one property at midnight on completion. It is also paid by all companies (regardless of whether own other properties) and by some trusts.
This will be yet another cost of being a property investor and landlord. Of course, this is no accident, bearing in mind the attitude of the Labour party to landlords over many years and their latest comments about the ‘asset holding class’ in the UK.
In addition, there will also increase the single rate of SDLT payable by companies and non-natural persons acquiring dwellings for more than £500,000, from 15% to 17%.
Let’s face it, these are absolutely crazy and highly punitive rates.
The new will apply to transactions with an effective date on or after 31 October 2024.
The manifesto promise to raise the rate for overseas buyers seems to have disappeared into the ether.
Conclusion
SDLT is a silly tax.
It’s just got sillier.
For over two centuries, the UK’s non-domiciled tax regime and its remittance basis has been a cornerstone of tax planning for wealthy expats and international families. It was introduced, along with income tax, by Willian Pitt the Younger at the very end of the 18th century. It was part of the fiscal firepower necessary to battle Napoleon Bonaparte. And, like income tax, it had pretty much been a constant feature of the UK’s system ever since. But in March 2024, the then Chancellor, Jeremy Hunt, rang the death knell for the remittance basis, with Labour’s Rachel Reeves – who would succeed Hunt a few months later - declaring she would have abolished it anyway. The end is therefore very much nigh for the UK’s non-dom tax regime. More specifically, the end is 6 April 2025. However, out with the old and in with the new’ goes the saying. As such, the ‘what comes next’ will reshape the tax landscape for non-doms, expats, and international investors with a UK footprint (or those considering creating one). What is Domicile (and Non-Domicile)? Domicile is not a straightforward concept like tax residence. The latter is largely about physical presence (or otherwise) in a particular. Instead, as well as physical presence, it also requires an understanding of your future intentions. Is a place somewhere that you intend to live permanently or indefinitely. There are two main types of domicile that I will discuss here: • Domicile of origin: This is inherited at birth, usually from your father (if you think that is misogynistic then I don’t make the rules, OK?). You do not lose your domicile of origin. However, think of it as the foundations of a building. You can a domicile of choice on top it. • Domicile of choice: You build a new domicile of choice by achieving two things. Firstly, by physically residing in place and, secondly, by forming the intention to stay in that same place permanently or indefinitely. Both must be present.
So you’ve left the UK for pastures new. The sun is shining. You're making more money. You’re enjoying a great quality of life in a new country. In fact, you’re totally de-mob happy. Even better, as a non-UK resident, UK taxes are a dim and distant unpleasant memory, right. Right? Wrong. I don’t necessarily see my role in life as chief balloon popper. However, there are some Uk tax things you should bear in mind before declaring yourself a tax exile. Am I really non-UK Resident (“NR”)? Up until 2013, the UK didn’t really have a statutory definition of residence for tax purposes. Yes, that’s as crazy as it sounds. Fortunately, the Statutory Residence Test (“SRT”) was introduced from 2013. The idea is that it provides a degree of objectivity through a series of tests. Although a statutory test, other than in straightforward cases, it can still remain complex.
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