Following the announcement at Budget 2018, HMRC is consulting until 6 May 2019 on the design of a new 1% SDLT surcharge on non-UK resident individuals and companies purchasing residential property in England and Northern Ireland.
The new surcharge will apply to purchases of residential property made by non-UK resident individuals and non-natural persons including companies, trusts and partnerships. It will apply to freehold and leasehold purchases of residential property and will be at a rate of 1% on top of all existing SDLT rates, including the rates applicable to the rental element of leasehold property.
The government believes the new surcharge will help control house price inflation fuelled by non-UK resident purchasers. The intention is for the proceeds of the new surcharge to be put towards measures to tackle rough sleeping.
The consultation is arranged in chapters covering:
the residence test for individuals (ch 2): individuals will be treated as non-UK resident for the purposes of the surcharge if they spend fewer than 183 days in the UK in the 12 months ending with the effective date of the transaction, with days spent in the whole of the UK taken into account;
the residence test for non-natural persons (ch 3): a new company residence test will be introduced, based on CTA 2009 Pt 2 ch 3 (company residence), to determine liability for the surcharge in relation to non-UK resident companies (including vehicles such as unit trust schemes and contractual schemes) and certain UK-resident close companies, where they are under the direct or indirect control of one or more non-UK resident persons at the relevant time;
reliefs and refunds from the surcharge (ch 4): the government is considering an upfront relief for non-UK residents who at the time of the transaction are Crown employees subject to UK income tax, and where individuals subject to the surcharge subsequently spend 183 days or more in the UK in the 12 months following the effective date of the transaction, they will be eligible for a refund;
interaction between the surcharge and existing SDLT reliefs (ch 5): this considers the availability of first-time buyers’ relief, multiple dwellings relief, alternative property finance relief, partial charities relief, collective enfranchisement, and seeding relief;
interaction of the surcharge with various other SDLT rules (ch 6): mixed residential and non-residential property transactions and purchases of six or more dwellings will not be within scope of the surcharge, while the surcharge will apply to linked transactions and to joint purchasers, including spouses and civil partners, if one of them is non-UK resident; and
compliance and administration of the surcharge (ch 7).
The document also includes a short survey (annex A) which aims to provide the government with information on the potential impact of the surcharge on the market and how this may alter the behaviour of purchasers.
Following the announcement at Budget 2018, HMRC is consulting until 6 May 2019 on the design of a new 1% SDLT surcharge on non-UK resident individuals and companies purchasing residential property in England and Northern Ireland.
The new surcharge will apply to purchases of residential property made by non-UK resident individuals and non-natural persons including companies, trusts and partnerships. It will apply to freehold and leasehold purchases of residential property and will be at a rate of 1% on top of all existing SDLT rates, including the rates applicable to the rental element of leasehold property.
The government believes the new surcharge will help control house price inflation fuelled by non-UK resident purchasers. The intention is for the proceeds of the new surcharge to be put towards measures to tackle rough sleeping.
The consultation is arranged in chapters covering:
the residence test for individuals (ch 2): individuals will be treated as non-UK resident for the purposes of the surcharge if they spend fewer than 183 days in the UK in the 12 months ending with the effective date of the transaction, with days spent in the whole of the UK taken into account;
the residence test for non-natural persons (ch 3): a new company residence test will be introduced, based on CTA 2009 Pt 2 ch 3 (company residence), to determine liability for the surcharge in relation to non-UK resident companies (including vehicles such as unit trust schemes and contractual schemes) and certain UK-resident close companies, where they are under the direct or indirect control of one or more non-UK resident persons at the relevant time;
reliefs and refunds from the surcharge (ch 4): the government is considering an upfront relief for non-UK residents who at the time of the transaction are Crown employees subject to UK income tax, and where individuals subject to the surcharge subsequently spend 183 days or more in the UK in the 12 months following the effective date of the transaction, they will be eligible for a refund;
interaction between the surcharge and existing SDLT reliefs (ch 5): this considers the availability of first-time buyers’ relief, multiple dwellings relief, alternative property finance relief, partial charities relief, collective enfranchisement, and seeding relief;
interaction of the surcharge with various other SDLT rules (ch 6): mixed residential and non-residential property transactions and purchases of six or more dwellings will not be within scope of the surcharge, while the surcharge will apply to linked transactions and to joint purchasers, including spouses and civil partners, if one of them is non-UK resident; and
compliance and administration of the surcharge (ch 7).
The document also includes a short survey (annex A) which aims to provide the government with information on the potential impact of the surcharge on the market and how this may alter the behaviour of purchasers.
