HM Insights

2% Stamp Duty Land Tax surcharge for non-residents

From 1 April 2021, the government intends to impose a 2% surcharge on non-resident individuals purchasing residential property in England and Northern Ireland. Scotland and Wales will undoubtedly follow suit.

Where the purchase will result in the non-resident investor having an interest in another residential dwelling, the 2% non-resident surcharge will apply in addition to the existing 3% surcharge for additional dwellings.

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Who is non-resident?

Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).

  • You’re automatically resident if either:
  • you spent 183 or more days in the UK in the tax year
  • your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:

  • you spent fewer than 16 days in the UK (or 46 days if you have not been classed as UK resident for the three previous tax years)
  • you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK

Why has the Non-UK Resident Surcharge Been Introduced?

This measure is intended to promote homeownership in the UK by reducing demand (and therefore prices) of UK property and using the revenues to tackle homelessness and rough sleeping in the UK.

Foreign investors play a large role in the UK housing economy, often purchasing property off-plan or developing property and selling these to UK individuals as part of a sub-sale agreement which shifts the SDLT liability to the UK purchaser.

The legislation does not appear to bring such transactions within the scope of the rules and is therefore failing to address a large chunk of the property activity which is undertaken by foreign investors and which undoubtedly plays a role in the upward drive of property prices.

Get in touch

If you require assistance in relation to anything mentioned in this article, please get in touch with a member of our team.

Useful links

PERSONAL TAXATION ADVICE