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Announcement of New Stamp Duty Land Tax

On 11th March 2020, Chancellor Rishi Sunak announced in the Budget that SDLT for overseas buyers will include an additional 2% stamp duty surcharge for purchases from 1 April 2021 if they buy a residential property in England or Northern Ireland.

Currently, there is no difference in stamp duty surcharge between UK residents and non-UK residents.

What triggered the proposal of the Non-UK Resident Stamp Duty Surcharge?

The Government hoped that the new stamp duty surcharge could take some heat out of the London property market where foreign investment is high. This in turn could help control house price inflation with the aim of making housing more affordable for UK residents.

In 2016, to control increase in house prices, which they believed was due to investor demand, the Government had announced a surcharge of additional 3% SDLT for people buying their 2nd residential property and upwards. The location of the 1st property is irrelevant, so unless that buyer does not own any property anywhere else in the world, the oversea buyer will have to pay a total of an additional of 5% Stamp Duty Land Tax.


Possible blind-spots

1. Property purchase in Scotland or Wales may be exempted from this surcharge, so it may be a good option to purchase in these areas.

2. Purchasing the property with a UK-Registered Company, because this means the entity buying the property will not be an oversea buyer, but rather a local company.

3. Buying off-plan and then flipping the property before completion of sale to a UK resident, because SDLT is only payable upon completion of a purchase. When a property is bought off plan, there is a long period between the exchange of contracts (signing the SNP in Malaysian terms), and completions (when the entire purchase price has been paid). So if the oversea investor sells off the property before it is completed then it is left to the ultimate purchaser to complete the sale and pay the SDLT.

To assist you in calculating your SDLT, please go to the following link for the stamp duty calculator:

https://www.stampdutycalculator.org.uk/

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