New SDLT charge for Non-UK Residents

On 8 July 2020, the Chancellor announced plans for temporary reduced rates of Stamp Duty Land Tax (SDLT) until 31 March 2021. This change has been well-publicised and has undoubtedly led to a “conveyancing boom”, with transaction levels very high at the moment.

On 20 July, plans to make an additional SDLT charge to non-UK residents were announced and these have received much less publicity. Those residents abroad wishing to buy residential property in the UK with a completion date on or after 1 April 2021 (unless contracts were exchanged before 11 March 2021), will be required to pay an SDLT surcharge of 2% of the purchase price over and above what would be payable by a UK resident. This will of course now apply also to buyers from EU countries.

A non-UK resident buying a property for £1,000,000 would pay up to £20,000 more than a UK resident buying the same property as their second property.

There is good news for anyone returning to the country after Brexit and indeed any non-UK residents purchasing a property with a view to being resident in the UK. The rules as presently contemplated say that you will be counted as a UK resident if you spend 183 days in the UK during any 365 day period starting one year before the transaction date and ending one year after the transaction date.

Ray Crudgington, Managing Partner at Grant Saw, said “Stamp Duty Land Tax has become ever-more complex since its introduction by the Labour Government in 2003. Full disclosure of your circumstances and if necessary taking independent tax advice may be required in the future to make sure that when you sign your SDLT Tax Return form, you are giving the correct information to HMRC and paying the correct amount of tax. The Government clearly planned this tax not only to be a significant source of revenue but also a check on ‘runaway’ house prices and getting the right advice will be important as the sums involved on higher value properties are huge. The amount of SDLT payable should be one of the first considerations a buyer has, in the case of such properties, when considering the affordability of the purchase or otherwise, they may get a nasty surprise late in the day”.

Grant Saw’s conveyancing team remain very busy during the current stamp duty concessionary period with very high volumes of transaction completions expected from October onwards.