Originally announced for consultation in 2018, the surcharge of 2% for non-resident purchasers of residential property was confirmed in March 2020 – taking effect from 1 April 2021 under what will be the Finance Act 2021. It applies to purchases in England and Northern Ireland, but Scotland and Wales are expected to introduce similar provisions at the same time. That is in addition to the 3% additional properties surcharge and means that the top rate of SDLT is now any eye-watering 17%.
The provisions can be summarised briefly as follows:
- An individual will be treated as non-UK resident for these purposes if they have spent fewer than 183 nights in the UK in the 12-month period ending with the effective date of the transaction (usually completion, but can be earlier).
- A company will be treated as non-UK resident for these purposes if it is incorporated outside the UK or, its central management and control is exercised outside the UK. In the latter case this will only apply if it is a close company – controlled by five or fewer participators.
- Where there is more than one purchaser the surcharge is payable in full if any one of them is non-UK resident, with some exceptions where there is a UK-resident spouse or civil partner buying alone or buying jointly with their non-resident spouse or civil partner.
- For trusts, the legislation will look at either the residence of the beneficiary or the trustee, depending upon what kind of trust it is.
- There is the chance to claim the surcharge back if he relevant purchaser becomes UK resident within the meaning of the legislation in the two years from completion.
HMRC’s guidance has not yet been published but is expected before the provisions come into force.