New Stamp Duty Land Tax Rates For Non-Residents

Non-residents will have new rates of Stamp Duty Land Tax (SDLT) from the 1 April 2021 under new measures.

The new rate will be 2% higher than purchases made by UK residents, and will apply to freehold and leasehold property, as well as rents on the grant of a new lease.

The objective of the change is to help make house prices more affordable, in line with the wider objectives on homeownership, which will help people get onto and move up the housing ladder. The measure may also help control house price inflation by leading to a reduction in residential property purchased by non-UK residents.

Following the announcement of the increase in the 2018 Budget, the measures are being introduced following a further consultation that ran from February to May 2019. The measure will apply to transactions from the 1 April 2021, yet contracts that are exchanged prior to 11 March 2020 but do not complete until on or after the introduction date, transitional rules may apply. This may also be the case where a contract is substantially performed on or before 31 March 20201 but does not complete before the introduction date.

The requirements for the additional 2% charge to apply will be set out in new Schedule 9A of FA 2003.

Those looking to buy property will need to consider their residence status and how this increase will affect them.

HMRC have stated:

“Most individuals will be clear as to their residence status for the purposes of SDLT but some individuals with more complex affairs or who have regular periods in and out of the UK may require additional advice and incur additional costs in determining their tax liability. Where individuals pay the surcharge but then satisfy the residence conditions in the 12 months following the transaction, they may be entitled to a refund.

“This measure may impact family formation, stability or breakdown by increasing upfront costs for some non-UK residents purchasing a home in England or Northern Ireland. It could affect customer decisions around the type and location of property purchased.”

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