SDLT non-resident surcharge consultation

10 May, 2019
by: Cripps Pemberton Greenish

  1. What the consultation is all about?

The SDLT consultation is about a proposed additional 1% SDLT surcharge on non-UK residents interested in buying UK residential property. The surcharge will be in addition to the existing high rates of SDLT. The Government’s argument is that the proposed change would assist UK residents with getting onto the housing ladder.

  1. How could the proposed changes affect you?

The proposed changes may deter clients from buying UK residential property or may cause them to reduce their offers in an attempt to make the vendors effectively pay for the surcharge.

  1. What is our response?

The consultation suggests a test of UK residence for individuals, which appears simple but in fact requires a significant fact find and careful consideration by property lawyers to determine whether their clients are UK resident for these purposes.

The proposed test would penalise individuals who are UK resident under the pre-existing statutory residence test (used for income tax and capital gains tax purposes). Arguably, it creates uncertainty, thereby undermining the original policy objective of creating greater certainty.

Amongst other things, we have proposed that if an individual was found to be UK tax resident under the statutory residence test for the tax year in which they buy residential property, they should be able to reclaim the surcharge.

Click on the link below for our detailed response.