Non-UK residents purchasing property in England and Northern Ireland should be aware of the new rates of tax 26 January 2021
Stamp Duty Land Tax (SDLT) is payable on the purchases of land and buildings in England and Northern Ireland and is charged on the basis of the purchase price of a property. It is a requirement to pay the figure across to HMRC within 14 days of the purchase.
HMRC has confirmed that, from 1 April 2021:
• Where a non-UK resident buys residential property in England or Northern Ireland, they will be required to pay the new rates of SDLT • The new rates will be 2% higher than those applicable to UK residents • The new rates will not be applicable to those buying non-residential property, for example, offices and shops
SDLT Residence Tests
Where a buyer is a non-UK resident, they can apply the following SDLT Residence Tests. Nationality and residence status under the UK Statutory Residence Test are not relevant for this purpose.
• Individual buyers will be non-UK resident if they are not present in the UK for a minimum of 183 days in the 12-months prior to their purchase • Corporate buyers will be non-UK resident where they are not UK resident for Corporation Tax purposes at the date of purchasing the residential property. However, special rules are applicable for UK resident companies which 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 • Trusts will be non-UK resident if any trustee is a non-UK resident under the SDLT residence tests – except where: - The trust is a bare trust, or - If any beneficiary is entitled to remain in the property for life, or entitled to income arising from the purchased property
Partners in a business partnership buying a residential property together will be treated as joint buyers, and if any partner is non-UK resident, then the new rates will apply.
Claiming a tax refund / relief from this tax charge
Individual buyers may be entitled to a tax refund if, following the purchase, they are present in the UK for at least 183 days in the two-year period beginning a year prior to the purchase and ending a year after the purchase. Additionally, if they’re a crown employee and / or their spouse or civil partner is one, they can claim an up-front relief from this tax charge.
The new SDLT rates are subject to approval by UK Parliament, but it is expected that they will be as displayed in the following table:
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%
Example – SDLT payable by a non-UK resident
The Chartered Institute of Payroll Professionals
Payroll: need to know
cipp.org.uk
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