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Does a Non-UK Resident pay extra SDLT?

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From 1st April 2021, all non-UK residents who purchase a property  will be liable for a new surcharge of stamp duty land tax (SDLT). An additional 2% will be payable on all purchases of residential property (freehold or leasehold) situated in England or Northern Ireland.

For company purchases of a residential property for £40,000 or more, this will be an extra 2 % in addition to the 3 % higher rates (or the flat 15% rate for properties over £500,000) which apply.

Who is a Non-UK Resident?

Individual purchasers will be considered non-UK residents if they spend fewer than 183 days in the UK in a 12-month period from the effective date of their purchase.

If there are multiple purchasers the 2% will apply if one of the purchasers is a non-UK resident.

If a property is being purchased as a trust the surcharge will apply if the beneficiary or one of the beneficiaries is non-resident under the test for individuals only. This will include where a new lease is granted to a trustee.

For companies, a non-UK incorporated company which is not managed and controlled from the UK will generally be classed as a non-UK resident for the purposes of the additional surcharge. However, in certain cases a company that is UK resident for corporation tax purposes (e.g. a UK incorporated company managed in the UK) can also be deemed for the purposes of the 2% surcharge to be non-UK resident if it is controlled by non-UK residents.

However, a refund of the extra 2% can be claimed if the purchaser spends at least 183 days in the UK in the following 12 months.

What is not charged the extra 2% SDLT?

  • Purpose built student accommodation
  • Residential property that is subject to the five percent commercial property rates (e.g. where six or more units are purchased in a single transaction and no claim for multiple dwellings relief is made)
  • Acquisitions of leases with less than 21 years to run
  • Purchases less than £40,000.00

Why is there a change to the rates?

The change has occurred to deter foreign purchasers from driving up UK property prices, most notably in London.  The aim of the additional 2% surcharge is to improve the affordability of housing for people living in the UK and help them with getting on to the property ladder. The government has proposed that the surcharge proceeds will be used to tackle rough sleeping.

Our Conveyancing team at Johnson Astills can assist you in you in your next purchase and provide you with further information regarding any conveyancing queries. Please contact us at our Leicester Office or Loughborough Office on 0116 2554855 or 01509 610312