Increased SDLT for non-UK residents purchasing residential property


The Government’s consultation on its proposals to increase the amount of stamp duty land tax (SDLT) paid by non-UK residents on the purchase of residential property in England and Northern Ireland closed today (6 May 2019). Currently the rates paid by UK residents and non-residents on residential property are the same but the consultation paper states, “there is evidence that purchases of property by non-UK residents is pushing up house prices for UK residents”.


What is proposed?


An additional 1% SDLT surcharge where the buyer is:


  • a non UK resident individual,
  • a non UK resident company, unit trust and authorised contractual scheme,
  • a UK resident closely held companies if they are controlled by non-UK residents,
  • a Partnership where any one of the partners is non UK resident,
  • a Discretionary trust which is non-UK resident.


Note that joint buyers will be caught in their entirety where any of the buyers is non-UK resident.


What is the test for residence?


The proposal is that any individual who spends less than 183 days in the UK in the 12 months prior to the effective date of the transaction (usually the date of completion) will be treated as non-resident for these purposes. A day in the UK will only be counted as a day if the individual is present in any part of the UK at midnight.  Note if the individual is then present in the UK for 183 days or more during the 12 months after the effective date they can reclaim the 1% surcharge. It is odd that the proposal is not to use the same definition as for the statutory residence test, i.e. an individual is a UK resident if they spend 183 days (meaning midnights) or more in the UK in a tax year.


For companies and unit trusts, the existing residence test used for tax treatment will apply.


Are there any reliefs?


The consultation only proposes limited reliefs for military personnel and Crown employees abroad on the basis that they will still be paying UK tax.


It is not clear when the proposals are to be introduced but it is likely to be in a future Finance Bill so possibly it will come into play from 1 April 2020.


For further information, please contact Linda Fletcher