Corporation Tax

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

Produced by Tolley
  • 16 May 2022 13:22

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...

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

A 2% SDLT surcharge that applies to land transactions of residential property in England and Northern Ireland by non-residents came 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 FA 2021 did not take place until 10 June 2021. This means that between 1 April 2021 and 9 June 2021 advisers needed to apply the Finance Bill version of the legislation; it was not possible to delay

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