New Stamp Duty Land Tax (SDLT) rates for non-UK resident purchases of residential property will come into effect on or after 1 April 2021, this applies to both freehold and leasehold transactions which are completed in England and Northern Ireland.
The surcharge will apply to buyers who are non-UK resident individuals. The 2% surcharge will apply to a non-resident transaction. A transaction is a non-resident transaction if the purchaser is, or (if there is more than one purchaser) the purchasers include a person who is non-resident. Therefore, in the case of joint purchasers (other than spouses or civil partners, see below), if one of the purchasers is UK resident and one is non-resident, the transaction will be considered a non-resident transaction. The draft legislation contains tests to determine whether a person is UK resident or not UK resident for the purposes of the transaction. There are different tests for individuals, companies and trustees.
The additional 2% of tax will apply as a surcharge to the various standard SDLT rates, i.e. i) the standard rates for residential transactions; ii) the higher rates for the purchase of additional dwellings; iii) the 15% flat rate for high value residential transactions by companies; and iv) the rates for first time buyers that qualify for relief. This means that the top rate of SDLT will be 17% from 1 April 2021 and the calculation of the SDLT due a residential property purchase is set to become even more complicated than it is at present. The rules will not apply where the purchase is for less than £40,000, or, in the case of leasehold transactions, where the lease has 21 years or less to run or the purchased interest is reversionary on a lease that has more than 21 years to run.