Stamp Duty Land Tax (SDLT) surcharge and
the non-resident UK property buyers
If you are a non resident interested in buying a residential property in the UK you should be aware that from 1 April 2021 different rates of SDLT will apply to you.
As a non resident buying residential property in the UK (either freehold or leasehold)you will have to pay 2 percentage points higher than those paid by the UK residents .
The surcharge will apply to you if you are a non resident and
- 1. You are buying a residential property. If you are buying property which is either non residential or a mixture of residential and non-residential the surcharge will not apply to you.
- 2. The property is leased for more than 7 years, If the lease was for 7 years or less on the date it was granted then the surcharge will not apply to you.
- 3. You entered a contract and it was substantially performed after 1 April 2021 or you exchanged the contract after 11 March 2020. If you entered into the transaction before this date the surcharge will not apply to you
If you satisfy the residence rule after the transaction
According to HMRC website “The individual buyers can claim a refund of 2% surcharge if after the purchase they are present in the UK for at least 183 days during any continuous 365 day period that falls within the 2 year period.
If the transaction involved more than one individual, the refund can only be claimed if all the individuals in a transaction satisfy the residence rule.
AM I A UK RESIDENT for SDLT purposes?
For tax purposes HMRC will not consider you a resident depending on your nationality or your visa status. HMRC has set some rules to establish whether or not you are considered a non resident for SDLT purposes in a particular transaction.
There are different rules for different situations, for example you might be buying property as an
- ● Individual
- ● Buying property together with your partner(married or civil partnership)
- ● Companies
- ● Partnerships
- ● Trusts
- ● Co-ownership authorised contractual schemes
- ● Alternative property finance
We have touched few situations below:
If you are buying as an Individual
If you are buying the property as an individual, you will be considered non- UK resident in relation to the transaction if you are not present in the UK for at least 183 days during the 12 month period before the purchase. An individual is considered to be present in the UK on a particular day if they are present in the UK at the end of the day.
To prove that you were in the UK on a particular period you should keep a record of your phone bills and other utility bills such as energy bills. credit card statements, any proof of the use of a sports club etc.
If you are buying with your married or a Civil Partner
If you are buying your property with your partner both of you will be treated as UK residents if any one of you satisfy the UK residence rule at the time of the transaction.
If you are a corporate buyer:
If the corporate buyers are not UK resident for Corporation tax purposes at the time of the transaction they will be considered non UK resident and will have to pay the surcharge.
If you are buying a property and you need any help in paying the surcharge or amending the return contact Taxaccolega, property accountants in Croydon, Surrey and Southall. Just call us at 020 8127 0728 and our expert team will be happy to help you.
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