13
Dec

A Guide To Stamp Duty For Overseas_Non-Resident UK Property Investors

Stamp Duty Land Tax (SDLT) is something that a lot of overseas investors need to know about but most don’t. We’ve put together a simple guide outlining everything you need to know about Stamp Duty as a non-resident UK property investor. What is Stamp Duty? Stamp Duty is a tax that’s paid to HMRC when you buy a house, flat or any other type of property in the UK. This is worked out as a percentage of the purchase price (you can see the tax brackets and rates further down in this guide). What are the new rates of Stamp Duty Land Tax for non-UK residents? For an overseas investor and non-UK resident, a 2% surcharge is added. This additional 2% came into effect from 1st April 2021 and is applicable to purchases of residential property in England and Northern Ireland. The surcharge applies to non-resident buyers regardless of the type of buyer (e.g. company or individual). This new surcharge for international buyers works alongside the current 3% Stamp Duty tax levied on the purchase of second homes. This means that an overseas investor who already owns another property anywhere in the world will be liable for both, seeing 5% added to the standard Stamp Duty payment required.

Are there any exemptions?

The new 2% surcharge will not apply to certain types of property purchases, including:
  • Purpose built student accommodation
  • Residential property that is subject to the circa 5% commercial property rates
  • Leasehold properties – if the lease is for 7 years or less, on the date it was granted.
In addition, a limited exception will apply to non-resident individuals who are “Crown employees” e.g. members of the armed forces posted overseas. When does Stamp Duty get paid? Stamp Duty must be paid to HMRC no later than 14 days after completion on the property. What if there is more than one purchaser? If the property purchase is made jointly with a spouse or civil partner (and the purchasers are cohabiting on the date of the purchase), only one of the purchasers needs to satisfy the UK resident test for the new surcharge not to apply. For other joint purchases (between friends, family or business partners) all purchasers would need to be UK residents to avoid the new surcharge. What would make me a UK resident for Stamp Duty purposes? An individual is deemed to be a UK resident if they have been in the UK for at least 183 days during any continuous period of 365 days. This 365-day period begins 12 months before the transaction and ends 12 months after. Could I get a refund of Stamp Duty if I became a resident? If an individual satisfies residency conditions within the 12 months after purchase, they may be entitled to a refund. The purchaser would have two years from the date of purchase to amend their Stamp Duty Land Tax return to claim a refund of the 2% non-resident surcharge. How much is Stamp Duty for an overseas/non-resident property investor?

Non-UK resident stamp duty tax bands

Brackets Standard rate (from 1 October 2021) Higher rates of stamp duty for second home purchases, with 2% overseas surcharge applied (1 October 2021). 
Up to £125,000 0% 5%
£125,001 – £250,000 2% 7%
£250,001 – £925,000 5% 10%
£925,001 – £1.5m 10% 15%
over £1.5m 12% 17%
For example, on a property purchase of £250,000 – you would pay £15,000 to HMRC as Stamp Duty. [LINK TO PROPERTIES] How can Luxury Invest Group Help? If you are looking to invest in UK property at a time when you or your company are a non-UK resident, the team at Luxury Invest Group can advise you on whether the surcharge will apply and if so, what you might do to mitigate the Stamp Duty surcharge. If you’re looking for further assistance or have any questions, please contact us