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The New Non-Resident Stamp Duty Land Tax surcharge

Posted on 29 Apr 2021 by Alexis Outram - News

Residential lettings

From 1 April 2021 a 2% Stamp Duty Land Tax (SDLT) surcharge will apply to Non-UK Residents purchasing residential property in England and Northern Ireland.

How will it work?

Essentially, the surcharge means an additional 2% rate of tax will be applied when calculating the SDLT liability on certain acquisitions of residential property located in England or Northern Ireland, by persons who are not (or are treated as not being) resident in the UK for these purposes. The surcharge will not apply to properties located in Scotland or Wales.

What types of properties will the surcharge apply to?

The surcharge will only apply to acquisitions of residential properties and not commercial properties. 

It may be required, if it is not clear, to establish if a property thought to be residential, is a dwelling.  This is a fairly subjective area where advice would need to be sought to establish the position.

Who does the surcharge apply to and what types of purchasers?

For the surcharge to apply the purchaser would need to be Non-UK Resident, specifically for the purposes of the SDLT rules. The rules are complex and will therefore need to be reviewed on a case-by-case basis. In addition it will depend on the type of purchaser i.e. individual, company, partnership, bare trust or as a joint purchase.

What is the administration required?

In terms of disclosure and administration, the SDLT return, (the tax return filed on completion of a property purchase), will need to reflect the additional surcharge.

In circumstances where the purchaser becomes entitled to a refund of the surcharge i.e. where an individual becomes UK resident within 12 months following the purchase, a refund can be claimed within 24 months of the transaction by amendment to the SDLT return.

If you are uncertain as to whether the rules apply to you and indeed if a property is residential as a dwelling or whether for these purposes you are deemed to be Non-UK Resident, please get in touch and we would be happy to help.

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