The HMRC has announced new information regarding the Stamp Duty Land Tax (SDLT) surcharge for non-residents purchasing a property in England and Northern Ireland from 1st April 2021. The announcement from the HMRC to the ATT read as follows; “Purchases of land and buildings in England and Northern Ireland are subject to Stamp Duty Land Tax (SDLT). It’s charged on the purchase price of a property and must be paid within 14 days of the purchase to Her Majesty’s Revenue and Customs (HMRC).”
What has changed?
Previously, Stamp Duty Land Tax (SDLT) rates were temporarily increased from 8th July 2020 – 31st March 2021, meaning that from the 1st April 2021, the rates are due to revert to their previous state.
From the 1st April 2021, any non-UK resident looking to buy property in England or Northern Ireland will be subject to the new rates planned to be implemented. These new SDLT rates are 2% higher than those for UK residents, however, they do not apply to those looking to buy non-residential property, e.g. offices and shops.
How to determine if you are a non-UK resident?
The HMRC has developed several tests to allow buyers to gauge whether they will be subject to the new Stamp Duty Land Tax surcharge, as nationality and residence status under the UK Statutory Residence Test is not relevant for this purpose.
Buyers can use the following to see whether the new SDLT rates will apply to them:
- Individual buyers will be non-UK resident if they are not present in the UK for at least 183 days during the 12-months before their purchase.
- Corporate buyers will be non-UK resident if they are not UK resident for Corporation Tax purposes at the date of buying the residential property. However, special rules will apply for UK resident companies that are under the direct or indirect control of non-UK resident persons.
- Partners in a business partnership buying a residential property together will be treated as joint buyers. If any partner is determined as a non-UK resident the new rates will still apply.
- Trusts will be non-UK resident if any trustee is a non-UK resident under the SDLT residence tests – except if:
- the trust is a bare trust
- any beneficiary is entitled to remain in the property for life or entitled to income arising from the purchased property
What are the predicted new rates?
The new SDLT rates remain subject to approval by UK Parliament, however, they are predicted to be as follows:
|The property, lease premium, or transfer value||New SDLT rate for non-UK residents||SDLT rate for UK residents|
|Up to £125,000||2%||0%|
|From £125,001 to £250,000||4%||2%|
|From £250,001 to £925,000||7%||5%|
|From £925,001 to £1.5 million||12%||10%|
|Over £1.5 million||14%||12%|
Details of the current rates of SDLT can be found on GOV.UK, and information on the new rates, when they are published, will also be available from there.
Claiming tax refund/relief from these charges?
Individual buyers may be able to claim a tax refund from the SDLT charges if, after they have made their purchase, they are then present in the UK for at least 183 days in the two year period beginning the year before they made their purchase, and ending the year after the purchase.
If you are a Crown employee and/or your spouse or civil partner is a Crown employee, you will be able to claim up-front tax relief from this charge.
Special rates of tax on the new SDLT rates?
Special rates of tax will apply to an individuals SDLT charge on account of two circumstances;
- If an individual is a first-time buyer – they may be entitled to pay tax at lower rates than those shown in the above table.
- If an individual owns or plans to own more than one residential property, or they buy their property using a company – they may have to pay tax at higher rates than those shown in the above table
How can Animo Help?
Our consultants always welcome the opportunity to support clients, existing and prospective, with any queries they have. We have comprehensive experience in supporting UK property purchases, and settling in the UK and can utilise that expertise to help guide you and/or your business. Get in touch with us today by calling +44 (0)207 060 0835, emailing us at firstname.lastname@example.org, or filling in a contact form below, where one of our consultants will be happy to answer any and all queries you may have.