Stamp Duty Land Tax: Surcharge for non-UK buyers
Since 1 April 2021 different SDLT rates apply to non-UK residents purchasing both freehold and leasehold property. The surcharge applies to all ‘non-resident transactions’, even if you intend to live in the property you’re buying and regardless of whether or not you already own a residential property.
How will this affect me?
This surcharge will add 2% of tax to all rates of SDLT payable on the purchase of any residential property, freehold or leasehold, where situated in England or Northern Ireland if the purchaser, or one of the purchasers, is not a UK resident. Where a piece of land or a building which is not a residence is purchased on its own, the surcharge will not apply.
For joint purchases, with the exception of Crown employees and married or civil partner couples, if any one purchaser is a non-resident the surcharge will apply. The surcharge also applies to certain UK resident companies that are controlled by non-UK residents.
What is classed as residency?
There are various specific conditions that determine whether a person is a UK resident or non-resident for the purposes of the surcharge. An individual will be treated as a UK resident if they have been in the UK for at least 183 days in any continuous period of 365 days falling within the two year window beginning 364 days before the purchase ending 365 days after it. Some people may need to be tested in other ways such as the alternative test.
Are there any exemptions?
Purchases for less than £40,000 (unless for a lease with rent payable the annual rent is £1,000 or more), and leases with seven or fewer years to run are considered transactions that are excluded from the surcharge.
Can I claim a refund of the surcharge?
If a purchaser can meet residency requirements within a 12 month period after the completion date then they may be able to claim a refund.
The Residential Property team at Thompson Smith are here to help with all of your property matters. They can be contacted on 01206 574431 (Colchester) or 01255 221919 (Clacton) or by email at movinghome@tsplegal.com. Please note we are not tax specialists and should you have questions regarding the current stamp duty rules, we would recommend that you seek specialist stamp duty advice before committing to a purchase.