There doesn’t appear to be any let up in the Government punishing potential owners.. Begs the questions.. If our young can’t afford to buy and buyers of second plus home buyers are already penalised and now foreign money is penalised if they want to buy, where will the stock come from for renters, without having to pay an arm and a leg?
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On 11 February 2019, the government published a consultation proposing yet another increase in the amounts of stamp duty land tax (SDLT) payable on the purchase of English and Northern Irish residential property.
This measure is therefore aimed at deterring the purchase of UK residential property by non-UK residents. As a reminder, the table below shows the current rates of SDLT – astronomical in the case of residential property – and the rates once the 1% surcharge is introduced:
| Consideration | SDLT rate (including second home charge) | New SDLT rate (including 1% surcharge and second home charge) |
| Up to £125,000 | 3% | 4% |
| Portion from £125,001 to £250,000 | 5% | 6% |
| Portion from £250,001 to £925,000 | 8% | 9% |
| Portion from £925,001 to £1.5 million | 13% | 14% |
| Portion above £1.5 million | 15% | 16% |
Who is non-UK resident for these purposes?
The proposal is that any individual who spends fewer than 183 days in the UK in the 12 months prior to the “effective date” of the transaction (usually the date of completion) will be treated as non-resident for the purposes of the 1% surcharge. A day in the UK will only be counted as such if the individual is present in any part of the UK at midnight.
It is proposed that for companies and unit trusts, the existing residence tests used in other tax contexts will apply.
Joint purchases (including under “linked” transactions) will be caught in their entirety where any of the purchasers is non-UK resident.
Can I just use a purchasing vehicle instead?
That won’t work. Purchases by the following vehicles will also be caught:
Will there be any reliefs?
The government does not intend to introduce any reliefs other than a narrow relief for Crown employees.
Those moving to the UK
If an individual suffers the surcharge on a purchase and then spends 183 days or more in the UK in the following 12 months they will be eligible for a refund.
When will this take effect?
The consultation runs until 6 May and declines to give a date for implementation, stating merely that this will be legislated for in a future Finance Bill – so perhaps 1 April 2020.
