Stamp Duty Land Tax for any non-UK residents is paid at the same rate as is paid by UK residents. However, Chancellor Rishi Sunak announced that SDLT for anyone from overseas will include an additional 2% surcharge from the 1st April 2021 ...
SDLT only applies to residential property, in England and Northern Ireland which means the charge doesn't apply in Scotland or Wales. These countries are very likely to adopt the non-UK surcharge when it comes into force in the other two countries.
The new SDLT surcharge for non-UK residents will apply as follows:
- Those individuals with fewer than 183 days in the UK in the 12 months ending with date of purchase
- a refund claim will be available if they then spend 183 days in the UK in the following 12 months
- there will be separate residence tests for companies, trusts and other buyers
- Tax residents of the UK will not therefore pay the stamp duty surcharge
The SDLT surchage for non-UK residents will be 2% above the residential rates, which includes the higher rate for additional dwellings and companies. Also included are the 15% rate and the first-time buyers rate.
This is in addition to the 3% higher rate surcharge most non-UK residents already pay as they own one or more residential properties outside the UK. This means Stamp Duty Land Tax for non-UK residents will be at least 17% of the property purchase price. The Government is consulting on legislation and will introduce the change in the 2020/21 Finance Bill.
The SDLT surcharge is designed to deter foreign buyers from pushing the UK property prices up. However, there is a blind spot here as if a non-UK resident purchases then 'flips' the property to a UK resident, no SDLT surcharge will be payable as the glitter gets sub-sale relief.
The Stamp Duty Land Tax surcharge for non-UK residents now introduces the concept of residence which is currently based on the location of the actual property. Yet, unless the rules about when SDLT is due are changed, this isn't likely to affect non-UK flippers very much at all.
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