New rates of Stamp Duty for non-UK residents from 1 April

Feb 05 | 2021

UK non-residents buying residential property face a sharp increase in Stamp Duty Land Tax (SDLT) rates from 1 April, together with new residency rules and a tough payment window of just 14 days, warns accountants Hillier Hopkins.

Natasha Heron, Tax Manager at Hillier Hopkins explained.  “The government will from 1 April charge UK non-residents a 2% SDLT surcharge on all residential property. This means on property under £125,000 where a UK resident would pay no Stamp Duty, a UK non-resident would pay 2% on the sale value. On properties over £1.5m, this increases to 14%. HMRC will also require Stamp Duty to be paid with 14 working days.”

However, the new rates do not apply to commercial and retail property, so this is likely to remain attractive for overseas investors.

UK non-resident buyers will also need to look closely at the residency rules relating to SDLT as they differ from residency rules applying to other taxes. Natasha believes this is likely to catch buyers unawares as a result of the fall in international travel as a result of the ongoing global COVID pandemic.

“The residency test for individuals looks back 12 months from the date of purchase and with the buyer considered a non-UK resident if they are not present in the UK for at least 183 days in that 12-month window,” said Natasha.

“Confusingly, an individual may not be considered a UK resident on a personal tax basis but could be considered a UK resident for SDLT purposes. This may catch buyers out as residential conveyancing solicitors do not always fully appreciate the technicalities surrounding SDLT. It is recommended that specialist advice is taken.”

Hillier Hopkins provides tax advisory and accountancy services to businesses and individuals in the UK and overseas.