New rates of stamp duty for non-UK residents from 1 April, says accountants Hillier Hopkins

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, explains:

“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.

“The new rates do not apply to commercial and retail properties and are 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. It is, says Natasha Heron, likely to catch buyers unawares as a result of the fall in international travel as a result of the ongoing global COVID pandemic.

Natasha added:

“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.

“Confusingly, an individual may not be considered 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. 

“Individual buyers may be able to claim a refund after the purchase if they are present in the UK for at least 183 days in a two-year window beginning a year before the purchase and a year after the purchase. Crown employees and their spouses may also claim an up-front relief from this tax.”

Kindly shared by Hillier Hopkins LLP