Non-resident SDLT surcharge for residential property ― 1 April 2021 onwards

Produced by Tolley
Non-resident SDLT surcharge for residential property ― 1 April 2021 onwards

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Non-resident SDLT surcharge for residential property ― 1 April 2021 onwards
  • SDLT rates to which the non-resident surcharge applies
  • Meaning of ‘non-resident transaction’
  • Meaning of dwelling for the non-resident surcharge
  • SDLT residence test ― individuals
  • Joint purchase by spouses / civil partners
  • One of the purchasers is a company or unit trust
  • SDLT residence test ― partnerships
  • SDLT residence test ― companies
  • Definition of close company for SDLT purposes
  • More...

A 2% surcharge SDLT surcharge that applies to land transactions of residential property in England and Northern Ireland by non-residents comes into force with effect from 1 April 2021. The rates apply to purchases of freehold and leasehold property and to SDLT payable in respect of rents on the grant of a new lease.

The surcharge applies in addition to various other rates, including the additional dwelling supplement and the 15% higher rate for non-natural persons.

The existing residence rules for other taxes do not apply for SDLT. A separate residence test is introduced for SDLT, as discussed below. It is important to look at the detail of the test, as sometimes the outcome is counter intuitive. For example, a UK resident close company is considered non-resident for SDLT if it is controlled by non-resident individuals.

It is important to remember that if the transaction is eligible for an SDLT relief that reduces or exempts a charge to SDLT, this also applies to the non-resident surcharge. For a list of SDLT reliefs, see the Stamp duty land tax ― basic rules for companies guidance note.

The non-resident surcharge rules apply to land transactions with an effective date of 1 April 2021 onwards, even though Royal Assent to Finance Bill 2021 is unlikely to take place until July 2021. This means that advisers must apply the Finance Bill version of the legislation; it is not possible to delay the submission of the SDLT return and payment until after Royal Assent. The effective date of the transaction and the transitional rules are discussed in ‘Commencement’ at the end of this guidance note.

Helpfully for advisers, HMRC has already published full guidance on the non-resident surcharge on the GOV.UK website and in SDLTM09850.

SDLT rates to which the non-resident surcharge applies

The non-resident surcharge rate is 2% more than the rate payable by UK residents. It applies in addition to the various other rates (discussed above) that apply to acquisitions of residential property including:

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