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Residential SDLT is set to become more complex from 1 April 2021 with the planned introduction of the new 2% surcharge for non-UK resident purchasers of residential property in England and Northern Ireland.
The 2% surcharge will apply to most purchases of freehold and leasehold interests. It will apply across all residential rates of SDLT including the rates for first time buyers and purchasers of additional dwellings bringing the maximum rate to 17% in some cases.
The Statutory Residence Test will not apply for SDLT purposes, instead the proposed residence test for individuals is a UK day count; an individual will be treated as a non-UK resident if they have spent fewer than 183 days in the UK during the period of 12 months ending with the date of the transaction in question. However, an individual who subsequently spends at least 183 days in the UK during the 12-month period starting on the date of the transaction in question, will be eligible for a refund of the surcharge paid.
A company will be non-UK resident if they are not UK resident for Corporation Tax purposes at the date of purchase. Special rules will apply for close companies that are UK resident but are under the control of non-UK resident persons.
A Trust will be non-UK resident if any trustee is non-UK resident under the SDLT residence tests except for bare trust and life interest trusts.
This area of SDLT is complex and advice should be sought from our specialist SDLT team. Please get in touch if you have any questions.