The legislation would also include some UK-resident companies controlled by non-UK residents and will apply to purchases of dwellings in England and Northern Ireland on or after 1 April 2021. It will apply to both freehold and leasehold properties.
The new rates will also increase the amount of Stamp Duty Land Tax (SDLT) payable on rents when a new lease is granted.
The government believes that 'a two per cent surcharge strikes the right balance between being high enough to have a material impact on house prices, thereby helping residents get onto and move up the housing ladder, and the UK remaining an open and dynamic economy that welcomes inward investment.'
Residence tests
Individuals will be considered as a non-UK resident where they spent fewer than 183 days in the UK in the 12 months up to the purchase date of the property. This would be refunded if the purchaser spends more than 183 days in the UK in the 12 months after the purchase.
Corporate residence will be defined using the principles used for Corporation Tax, including where a company is “treaty resident” for Corporation Tax purposes under a Double Taxation Agreement.
The proposals simplify residence test for trusts so that the residence status of a trustee is determined using the relevant SDLT residence test. Where there are multiple trustees, the trust will be UK-resident only if all the trustees are UK-resident under the SDLT tests.
Propertymark response
Stamp Duty Land Tax: Non-UK resident surcharge
We responded to the UK Government's consultation on a one per cent Stamp Duty Land Tax (SDLT) surcharge for non-UK residents purchasing residential property in England and Northern Ireland.