Changes to SDLT for non-resident property purchasers revealed

The new measure will mean an additional 2 per cent surcharge on existing SDLT rates for those who purchase residential property in the UK but are not UK residents. It will also apply to some UK resident companies controlled directly or indirectly by non-resident persons. The surcharge will apply to both freehold and leasehold properties in England and Northern Ireland.

We’re reminding professionals that they should make their clients aware of the impending change if they could be affected, particularly considering the length of time that property purchases can take to complete.

For individuals, it’s worth remembering that a person’s residence status is determined by a simple and SDLT specific test, which requires the individual to be present in the UK for a set number of days by reference to the effective date of the transaction.

They can also encourage clients to use the government’s online calculator at GOV.UK. This will allow them to work out their likely SDLT liability ahead of a potential purchase.

The change was first announced in the 2018 budget, going through consultation between 11 February and 6 May 2019. Responses were invited and shared in a report published in July 2020. Many respondents were welcoming of the government’s underlying policy objective of supporting home ownership, with a number in agreement that the surcharge would support this objective. The government’s recognition that many of those affected would not be tax experts and to favour simplicity in designing the surcharge was also welcomed.

Full guidance on the change, including how residency is determined for these purposes, can be found at this link.