Patrick Cannon advises and represents non-UK resident clients on SDLT on property transactions in the UK. Stamp Duty Land Tax is complex, and a failure to comply with HMRC’s requirements can lead to investigations or litigation – making it absolutely key to instruct a highly experienced specialist SDLT barrister.
Patrick Cannon offers guidance on the 2% SDLT surcharge for non-UK buyers – providing advice on legitimate ways to avoid or mitigate this extra tax. His services also include filing SDLT returns for non-residents and managing correspondence with HMRC. He also has considerable experience in representing corporate and private clients in tax tribunals and in the courts. For more information or to make an appointment, contact Patrick Cannon here.
Do Non-UK Residents Pay Stamp Duty?
Stamp Duty Land Tax must be paid on all property transactions in England and Northern Ireland (although there some exemptions, such as for first-time buyers or for gifts). SDLT carries a higher rate for non-UK buyers.
What are the Rates of Stamp Duty for Non-UK Residents?
Overseas companies or individuals are subject to a 2% surcharge on top of the normal SDLT rates when they buy land or property in England and Northern Ireland.
Who Does The Non-UK Resident Surcharge Apply To?
The surcharge applies if one or more of the buyers of a property is a non-resident.
In order to have UK resident status (thus avoiding the surcharge), a purchaser must be present in the UK for at least 183 days during any continuous 365-day period immediately prior or immediately after the transaction date.
There are special rules for co-purchasing spouses, partnerships etc.
If a company is not UK resident for corporation tax purposes, then it must pay the 2% surcharge on any property purchase in England and Northern Ireland.
A company that is resident in the UK, but is a ‘close company’ and meets the non-UK control test under paragraphs 9 and 10 of new Schedule 9A is also liable for the 2% SDLT surcharge.
The SDLT exemptions and criteria for resident or non-resident buyers are complex. Any individual or company who might be considered non-UK resident buying a property should consult with an expert tax lawyer to review their liability or potential mitigation of the SDLT surcharge.
Can The Non-UK Resident Stamp Duty Surcharge Be Avoided?
Yes, the SDLT surcharge can be avoided. Where a non-UK resident off-plan buyer flips the property to a UK resident, the surcharge will not apply, where the flipper gets full sub-sale relief from SDLT.
How Can Patrick Cannon Help?
Patrick Cannon has extensive experience in the field of SDLT for non-UK resident property buyers. He has an in-depth knowledge of the complexities of the 2% SDLT surcharge and can advise on legitimate ways to avoid the extra tax. Patrick can also handle all of your correspondence with HMRC and file your returns as an authorised tax agent, as well as defend you in a tax tribunal, advise you in cases of HMRC investigations and support you in claiming refunds.
To make an appointment with one of the UK’s leading SDLT barristers, contact Patrick Cannon here.
Yes. Individuals who become UK-resident after submitting their land transaction return have up to two years to amend their land transaction return in order to claim repayment of the non-UK resident SDLT surcharge.
SDLT for overseas buyers will usually be at a top rate of 17% of the purchase price. This is either a flat rate of 17% in the case of the existing 15% higher rate on companies buying a dwelling (subject to the available SDLT exemptions), or in other cases, on the top slice of the purchase price above £1.5m.
The surcharge applies if one or more of the buyers of a property is a non-
resident. In order for an individual to have UK resident status (thus avoiding
the surcharge), a purchaser must be present in the UK for at least 183 days
during any continuous 365-day period immediately prior or immediately after
the transaction date.
There are special rules for co-purchasing spouses, partnerships etc.
If a company is not UK resident for corporation tax purposes, then it must pay
the 2% surcharge on any property purchase in England and Northern Ireland.
Under para 7, Schedule 9A, Finance Act 2003, a company is non-resident in
relation to a chargeable transaction if, on the effective date of the chargeable
transaction, either of the following two conditions is met:
(1) the company is not UK resident for the purposes of the Corporation Tax
Acts (para 7(2)); or
(2) the company is UK resident for the purposes of the Corporation Tax
Acts, but:
• is a close company (para 7(3)(a));
• meets the non-UK control test in relation to the transaction (para 7(3)(b));
and
• is not an excluded company – (para 7(3)(c)).
Sch 9A FA 2003 created a 2% SDLT surcharge on purchases of dwellings in
England and Northern Ireland made by non-UK resident purchasers, including
certain UK resident companies controlled by non-residents for purchases with
an effective date on or after 1 April 2021.
The surcharge applies in addition to any other rates of SDLT on residential
property, including the rates which apply to first-time buyers, purchases of
additional dwellings, purchases made by companies and purchases where the
consideration exceeds the higher rate threshold. It applies to purchases of
both freehold and leasehold property, as well as SDLT payable on rents on
the grant of a new lease. The surcharge does not apply to purchases of non-
residential property or mixed transactions (except where multiple dwellings
relief is claimed). Various reliefs from the surcharge are available. Subject to
conditions, a refund can be claimed.
Yes they can. Care is needed however because the flat rate of 15% SDLT plus the 2% non-UK resident surcharge is charged on the value of any dwelling costing more than £500,000 bought by a non-UK resident a corporate body, or non-natural person or UK resident corporate that is controlled by a non-UK resident. This includes:
– Companies
– Partnerships
– Collective investment schemes
The 15% SDLT rate does not apply to property bought by a company that is
acting as a trustee or that is bought to be used for:
– Property rental (buy-to-let)
– Property developers and traders
– Property for the public
– Property occupied by employees
– Financial institutions acquiring property in the course of lending
– Farmhouses
This tax rate is designed to tax properties that are bought by foreign nationals within a limited company, which would usually attract a lower rate
of Stamp Duty land tax through re-sale.
If the 15% flat rate does not apply then the ordinary rates of SDLT will apply
plus the 3% additional rates for first and subsequent purchases of residential property by corporates plus the 2% non-UK resident surcharge.
SDLT is a one-off charge applied at the effective date of the transaction. However, Where the lease provides for the rent to be reviewed or varied, or the rent is contingent, uncertain or unascertained, the actual rent payable in the first five years of the term is taken into account for the purposes of the tax computation. When the rent for the first 5 years becomes certain, the net present value of the actual rent can be reviewed and a return submitted if necessary to claim any overpayment
Yes they do. Non-resident Capital Gains Tax is payable by:
– non-resident individuals
– personal representatives of a non-resident who has died
– non-residents in a partnership
– non-resident landlords
– non-resident trustees
– UK residents meeting split year conditions and the disposal is made in the
overseas part of the tax year
Capital gains tax must be reported and paid within 60 days of the disposal of the property using the Capital Gains Tax on UK property service if the following property has been sold or disposed of:
– residential UK property or land (including any buildings on the land)
– non-residential UK property or land
– mixed use UK property or land
– rights to assets that derive at least 75% of their value from UK land (indirect
disposals)
Non-resident companies are chargeable to corporation tax on chargeable gains on the disposal of:
(a) UK-situated assets with a connection to the company's UK permanent
establishment
(b) interests in UK land, and
(c) assets deriving at least 75% of their value from UK land where the
company has a substantial indirect interest in that land
Corporation tax is charged at 19% but increasing to 25% from 2023.
What are UK capital gains taxes for non-resident landlords?
Non-residents pay CGT on the gain arising after 5 April 2015 on the disposal of UK residential property.
Non-residents pay CGT on the gain arising after 5 April 2019 on the disposal
of UK non-residential property.
CGT is also payable on the indirect disposal of UK land after 5 April 2019.
