Good news for non-residents hit with an additional 2% stamp duty!

Since the 1 April 2021, different rates of Stamp Duty Land Tax have applied to purchasers of residential property in England and Northern Ireland who are not resident in the UK.

The rates are 2 percentage points higher than those that apply to purchases made by UK residents. This surcharge applies to purchases of both freehold and leasehold property, as well as increasing the Stamp Duty Land Tax payable on rents on the grant of a new lease.

Most land and property transactions taking place in England or Northern Ireland must be notified to HMRC on a SDLT return within 14 days of the effective date of the transaction. It is therefore possible that an individual may not yet have spent at least 183 days in the UK by the time the SDLT return is submitted.

Amendment of return where individual becomes UK resident after return delivered – para 19 Sch 9A FA03

Where the assumption in paragraph 18(2) applies to the completion of a SDLT return and the individual or individual purchasers subsequently become UK resident under paragraph 4(1), the purchasers are entitled to claim a refund of the surcharge paid.

The refund is claimed by amending the SDLT return to take account of the fact that the transaction is ultimately not liable to the surcharge. This can be done at any time before the end of the period of two years beginning with the day after the effective date of the transaction (paragraph 19(2)). Such amendments do not need to be accompanied by the documents set out at paragraph 6(2A) Sch 10 FA03 (paragraph 19(3)), i.e. the contract for the land transaction and the instrument (if any) by which that transaction was effected.

It is important to note that where the chargeable transaction has more than one purchaser, all of the purchasers must be individuals who are UK resident in relation to the transaction under paragraph 4, although the continuous 365-day period in which 183 days must be spent in the UK can be different for each purchaser. A refund may only be claimed once all purchasers have obtained UK resident status in relation to the transaction. See SDLTM09880 for more details of the paragraph 4 residence rule and examples of how this applies to multiple purchasers.

However, in the case where one of the couple, have a contract of employment abroad and therefore have to return to their overseas location, the following may apply:

Where the residence test for individuals set out at paragraph 4(1) is met after the SDLT return is submitted, then as explained at SDLTM09960, it is possible for the purchaser or purchasers to claim a refund of the surcharge paid.

Where an individual meets that test, but their spouse or civil partner remains non-resident, then the special rules at paragraph 12 which apply to spouses and civil partners continue to apply to treat that non-resident spouse of a civil partner as also UK resident for the purposes of the transaction. See SDLTM09960a

A great result for non-resident couples either coming to live in the UK or returning to the UK, where one must continue employment abroad for a period of time.