A consultation on introducing a 1 percent SDLT surcharge for purchases of dwellings in England and Northern Ireland made by non-UK resident buyers has been published.
A consultation on introducing a 1 percent SDLT surcharge for purchases of dwellings in England and Northern Ireland made by non-UK resident buyers has been published. The consultation, announced at the Autumn Budget held on 29 October 2018, contains more information on the proposal, including a new deemed residency test for individuals and borrowing existing residency tests for trusts and companies. No exemptions are proposed other than one for Crown employees (for example, members of the armed forces) posted overseas. Individuals would be entitled to reclaim the surcharge if they become UK resident in the 12-month period beginning with their purchase.
The rules have the potential to add considerable complexity to the SDLT rules in an area which is often dealt with by non-tax professionals (conveyancers). In fact, under the proposal, the number of alternative sets of tax rates and bands for residential property transactions would almost double. There would be 11 sets of tax rates and bands covering a range of scenarios with tax rates ranging from 0 percent to 16 percent.
The deemed residency test proposed for individuals is specific to SDLT. An individual would be treated as UK resident for these purposes only if they have been in the UK (at midnight) on 183 days or more in the year preceding their purchase. So an individual may be treated as UK resident for income tax purposes but non-UK resident for SDLT purposes.
It is pertinent to also point out that:
The consultation will end on 6 May 2019. Stakeholder meetings are expected to be run before that date.
If you would like to discuss the document and proposals with us then please contact Simon Yeo and Neil Whitworth (contact details below). Alternatively, direct responses can be sent to Non-residentSDLTsurchargeconsultation@hmtreasury.gov.uk. This e-mail address can also be used to register interest to attend stakeholder events.
For further information please contact: