HMRC SDLT: SDLTM09960 – SDLT – increased rates for non-resident transactions: Completion and amendment of land transaction return where an individual becomes UK resident after return delivered – paras 18 and 19 Sch 9A FA03
Principles and Concepts of SDLT for Non-Resident Transactions
This section of the HMRC internal manual explains the process for completing and amending a land transaction return when an individual becomes a UK resident after the return has been delivered. It focuses on the increased rates for non-resident transactions under paragraphs 18 and 19 of Schedule 9A of the Finance Act 2003 (FA03).
- Guidance on completing land transaction returns.
- Amendment procedures for non-resident transactions.
- Implications of becoming a UK resident post-return.
- Reference to specific legislative provisions (Sch 9A FA03).
Completion of Land Transaction Return
Understanding the Residence Test
The residence test in this context is explained in paragraph 4(1) of the relevant tax legislation. It takes into account two important time periods:
– A ‘relevant period’ of 364 days before the transaction date.
– A ‘relevant period’ of 365 days after the transaction date.
This means that an individual can become a UK resident even after the transaction has been completed.
Submitting SDLT Returns
In most cases, land and property transactions in England and Northern Ireland must be reported to HMRC through a Stamp Duty Land Tax (SDLT) return within 14 days of the transaction date. This requirement leads to situations where a buyer may not have spent at least 183 days in the UK when the return is filed.
In these situations, the SDLT return must be completed with the assumption that the buyer, or each buyer in the case of multiple purchasers, is considered non-resident throughout the period from the date of the return submission until the end of the relevant period, as outlined in paragraph 18(2).
Example of Non-Resident Transaction
Consider Mohammed, who lives in France. He buys a 99-year leasehold interest in a residential property in England on 1 June 2025 for £200,000. His solicitor files the SDLT return online on 2 June 2025.
Here are the details of Mohammed’s stay in the UK:
– From 1 February to 1 June 2025, he spent 100 days in the UK.
– From 2 June 2025 to 31 January 2026, he spent 85 days in the UK.
According to the residence test in paragraph 4(1), Mohammed qualifies as a UK resident for the transaction because he spent enough time in the UK within the relevant periods. However, since he submitted the SDLT return on 2 June 2025, he had only spent 100 days in the UK by that date, which means the return was prepared based on the assumption that he was non-resident at that time.
As a result, all conditions mentioned in paragraph 2(1) for classifying it as a non-resident transaction were fulfilled. Therefore, the SDLT return was completed with the conclusion that the surcharge applied.
Amending the Return after Becoming a UK Resident
Filing for a Refund
If the assumption made while completing the SDLT return indicates that the buyer was non-resident, but later they become a UK resident according to paragraph 4(1), they can claim a refund for the surcharge paid.
To do this, the buyer must amend the original SDLT return to reflect that the transaction is not liable for the surcharge. This amendment can be made any time within two years from the day after the transaction date, as detailed in paragraph 19(2).
No Need for Additional Documents
Amendments to the SDLT return do not require the usual supporting documents, such as the contract for the land transaction or any related legal instrument, as specified in paragraph 19(3) of the guidelines.
Multiple Purchasers
When a property transaction has more than one buyer, all buyers must be classified as UK residents based on the residence criteria outlined in paragraph 4. However, it’s essential to recognize that each buyer can meet the 183-day requirement in different continuous 365-day periods.
Refunds can only be claimed after all buyers have achieved UK resident status concerning the transaction. For more detailed information on the residence rules and examples for buyers, see SDLTM09880.
Example of Claiming a Refund
Continuing with Mohammed’s scenario: after the purchase date, he later becomes a UK resident under the residence criteria. He has until 1 June 2027 to amend his SDLT return and inform HMRC that the transaction is finally not subject to the surcharge. He can then apply for a refund for the 2% surcharge that he initially paid.
General Information on SDLT Processes
Further details on SDLT returns, amendments, and the process for claiming refunds can be explored by following additional guidance available on the HMRC website.
Key Aspects to Note
– SDLT Return Deadline: Always submit SDLT returns within 14 days of the transaction date.
– Residence Status: As per the residence test, determine your status based on your stay in the UK within the relevant periods.
– Amendment Process: Keep in mind you have up to two years to amend your return if your resident status changes.
– Documentation: Be aware that you may not need to provide additional documents when amending your SDLT return.
– Multiple Buyers: Understand that all buyers must achieve UK resident status to qualify for a refund.
This content provides a straightforward understanding of the SDLT processes regarding non-resident transactions, how to handle the SDLT return, and how to claim refunds if residency status changes post-transaction.