The UK government launched a consultation on the design of a 1% Stamp Duty Land Tax (SDLT) surcharge on non-UK residents purchasing residential property in England and Northern Ireland. This would raise the top rate of SDLT to 16%.
The government said it was committed to helping more people into home ownership but there was evidence that purchases of property by non-UK residents were pushing up house prices for UK residents.
The non-UK resident surcharge will apply to purchases of residential property made by non-UK resident individuals and certain non-natural persons. The surcharge will apply to freehold and leasehold purchases of residential property and will be at a rate of 1% on top of all existing SDLT rates, including the rates applicable to the rental element of leasehold property.
No specific reliefs are offered for the new charge but existing reliefs will generally apply as normal. Mixed-use schemes, and purchases of six or more dwellings, will continue to be treated as non-residential and thus not subject to the surcharge. Multiple dwellings relief will also be available, and the minimum rate of 1% of the total amount paid will remain unchanged for those paying the surcharge, giving a 2% minimum effective rate.
Individuals will be regarded as non-resident if they spend fewer than 183 days in the UK in the 12 months immediately prior to the date of the purchase. New or modified tests of residence are to be introduced specifically for the charge. It will apply to UK-resident close companies that are controlled by non-UK resident shareholders, as well as some partnerships and trusts.
Responses to the consultation are due by 6 May. The new residence rules will be incorporated in a future Finance Bill.