New rates of Stamp Duty Land Tax (SDLT) have been introduced from 1 April 2021 for non-UK resident purchasers of residential property.
For non-UK residents purchasing residential property in Northern Ireland and England, the new rate will mean an additional 2% surcharge on existing SDLT rates.
The surcharge applies to the purchases of both freehold and leasehold properties and increases the SDLT payable on rents on the grant of a new lease.
It also applies to certain UK resident companies controlled by non-UK residents.
It should be noted that the surcharge applies to all ‘non-resident transactions.’ Essentially this will even include transactions in which a purchaser intends to live in the property or perhaps already owns a residential property.
SDLT residence tests
An SDLT specific test is used in order to determine a person’s residence status.
Individual purchasers are non-UK resident in relation to their transaction if they are not present in the UK for at least 183 days during the 12 months prior to their purchase.
However, individual purchasers may be able to claim a refund of the 2% surcharge where they meet residency requirements within a 12-month period following the effective date of transaction.
In the case of a purchase which is made jointly with a spouse or civil partner so long as they are not separated and where only one of the purchasers is UK resident in respect of the transaction, both will be treated as UK resident. Therefore, the surcharge will not apply.
If you are not married or in a civil partnership, i.e. cohabitees and joint purchasers and one of you are non-resident, both will be treated as non-resident and the surcharge will still apply.
For further information and advice please contact our Property Team.