Chartered Accountants and Professional Business Advisers

Stamp Duty Land Tax - Potential increase for non-residents buying UK residential land

Stamp duty Land Tax – Potential increase for non-residents buying UK residential land.

The Government has invited comments on its plans for a 1% Stamp Duty Land Tax surcharge on non-UK residents purchasing residential property in England and Northern Ireland. 

Who is affected?

The consultation document says that the surcharge will apply to non-UK resident individuals and companies, and certain UK resident close companies purchasing residential property in England and Northern Ireland. Wales and Scotland are not covered by the proposals, but may well follow suit.

A UK-resident close company will be affected if, at the point it acquires residential property, it is a close company under the direct or indirect control of one or more non-UK resident persons. 

A partnership will be affected if a non-resident is one of the partners.

Generally, non-resident trusts are affected. UK resident trusts' position will differ according to whether there is a beneficiary with an interest in possession in the relevant property.

Residence test for individuals

One surprise is the suggestion that the Statutory Residence Test will not be used for individuals. Instead the government is proposing to treat individuals as non-UK resident for the purposes of the surcharge if they spent fewer than 183 days in the UK in the 12 months ending with the date the transaction occurs. And then, if an individual who has been subject to the surcharge spends 183 days or more in the UK in the 12 months following the the transaction, they will be eligible for a refund of the surcharge!

Implementation timetable

The consultation is to run to 6 May, then the consultation document simply says 'The surcharge will be legislated for in a future Finance Bill.'

 

Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above. If you would like advice or further information, please speak to your usual Shipleys contact.

Need more help? Please contact us at advice@shipleys.com or +44 (0)20 7312 0000